The commission structure is the linchpin of the life insurance industry. This system actually has a good deal of resonance in the marketplace because many consumers would not otherwise focus on their life insurance needs. The high commissions are paid as a reward for successfully soliciting and hard selling. Consequently, agents' performance standards focus on the amount of premium generated, not on the quality of purchase recommendations, accurate policy analysis, or servicing. We see a similar pattern among our political elite.
Many citizens vote for politicians who overpromise.
Many consumers buy life insurance from salespeople who hype planning issues and policy performance, and then ignore the messes left behind. In moments of candid reflection, politicians and life insurance salespeople both acknowledge their regret for the process they must use, while realizing to be successful it is what each of their respective markets require. The selling expenses of a typical low-load policy are 15 to 20 percent of a specific target premium. The low-load salespeople generally are paid salaries. They are less likely than their full-commission counterparts to propose that consumers pursue complicated life insurance planning schemes.