SOFA-CFE · Question #278
The amount of premiums written is generally used as a basis for determining compensation paid to the agent, called:
The correct answer is C. commission. Commission (C) is the term for compensation paid to insurance agents, typically calculated as a percentage of the premiums written on policies they sell - it's the standard industry mechanism for incentivizing agents to generate business. Why the distractors are wrong…
Question
The amount of premiums written is generally used as a basis for determining compensation paid to the agent, called:
Options
- Acollection
- Brevenues
- Ccommission
- Dearning
How the community answered
(36 responses)- A6% (2)
- B6% (2)
- C72% (26)
- D17% (6)
Explanation
Commission (C) is the term for compensation paid to insurance agents, typically calculated as a percentage of the premiums written on policies they sell - it's the standard industry mechanism for incentivizing agents to generate business.
Why the distractors are wrong:
- Collection (A) refers to the act of gathering/receiving payments, not a form of compensation.
- Revenues (B) is a broad accounting term for total income earned by a company, not a specific agent payment type.
- Earning (D) is too generic - while agents do "earn" money, this isn't the technical term for how they're paid in insurance.
Memory tip: Think of a salesperson at a car dealership - they earn a commission on each sale. Insurance agents work the same way: the more premium volume (sales) they write, the higher their commission payout.
Community Discussion
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