Glossary
The words the business actually uses, defined properly and with the arithmetic shown.
Chargebacks, contract levels, persistency, vesting, target premium. Every entry gives a plain definition, why it matters to you rather than to a textbook, and a worked example with real numbers — because "what does that actually cost me" is the question underneath most of them.
Compensation
As-earnedAs-earned means you are paid commission as each premium payment is actually collected, rather than advanced up front.ChargebackA chargeback is when a carrier reclaims commission it already paid you, because the policy it was paid on lapsed, was cancelled, or was never fully earned.Commission advanceAn advance is the carrier paying you most of a policy's first-year commission up front, before the premium that funds it has been collected.Contract levelYour contract level is the commission percentage a carrier pays you on a product, expressed as a percentage of the target premium — 70%, 90%, 115% and so on.Excess premiumExcess premium is premium paid into a permanent life policy above its target premium.First-year commissionFirst-year commission is the percentage a carrier pays on the first twelve months of premium, and it is far larger than what follows — often most or all of the annual premium on life products.OverrideAn override is commission earned on someone else's sale, equal to the gap between your contract level and theirs.Renewal commissionRenewal commission is the smaller percentage paid on premium after the first year, for as long as the policy stays in force and you remain entitled to it.Street levelStreet level is the standard, widely-offered contract level for a product — the rate an agent gets without negotiating or producing volume.Target premiumTarget premium is the carrier-set amount of premium on a permanent life policy that full first-year commission is paid on.VestingVesting determines whether you keep renewal commission on business you wrote after you leave the agency or upline you wrote it through.
Policy mechanics
Free look periodA free look period is a window after a policy is delivered — commonly 10 to 30 days, set by state law — during which the client can cancel for a full refund of premium.LapseA policy lapses when premium stops being paid and coverage ends after the grace period.Orphan policyAn orphan policy is an in-force policy whose writing agent is no longer with the agency or the business, leaving the client with coverage and no servicing agent.PersistencyPersistency is the share of policies still in force after a given period — usually measured at 13 months, and by premium rather than by policy count.
Distribution
Production
Annualized premiumAnnualized premium is the premium a policy would generate over twelve months, regardless of how it is actually paid.Book of businessYour book of business is the set of in-force policies you have written and are entitled to service and earn from.Modal premiumModal premium is the amount actually billed each time premium is collected — the monthly, quarterly, semi-annual or annual payment.