Trust Builder Topic: Producer Compensation Last updated: 2026-06-27

Annuity Commission Disclosure (Honest)

TL;DR: Annuity commissions range from 1% (SPIAs and short MYGAs) to 8% (some FIAs and VAs) of premium. The carrier pays the producer — the buyer does not write a separate check. But the commission shows up indirectly through caps, surrender schedules, and credited rates. Most "fee-only" advisors charge 1% AUM annually, which at 20 years compounds to ~20% of assets — often more than a one-time commission. Below: real commission ranges by product, how to verify what your producer earns, and why "fee-only" doesn't automatically mean cheaper for you.

Commission ranges by product type (2026 industry standard)

Product	Typical commission to producer	Paid by	Surrender period
MYGA (3-yr)	1.0-2.0% of premium	Carrier	3 years
MYGA (5-yr)	1.5-3.0% of premium	Carrier	5 years
MYGA (7-10 yr)	2.5-4.5% of premium	Carrier	7-10 years
SPIA	1.0-3.5% of premium	Carrier	None (irrevocable)
FIA (5-yr)	3.0-5.0% of premium	Carrier	5 years
FIA (7-10 yr)	4.0-7.0% of premium	Carrier	7-10 years
FIA (14+ yr w/ bonus)	5.0-9.0% of premium	Carrier	14+ years
Variable annuity	4.0-8.0% of premium + trail	Carrier	5-9 years
Whole life insurance	50-110% of first-year premium	Carrier	N/A

These are direct producer compensation figures — what the carrier pays the writing agent. They do not include marketing organization overrides, FMO splits, or trail commissions, all of which add another 1-3% to the carrier's total distribution cost.

How commission shows up in your contract economics

The buyer never writes a check for commission. But it's not free — it's embedded in product economics:

Lower credited rate or cap. A 5-year MYGA paying 5.95% vs. one paying 6.10% — the 15 bps difference is partly the commission differential between two carriers.
Longer surrender schedule. A 14-year FIA can pay 7%+ commission because the carrier has 14 years to recover that distribution cost from the spread it earns on your premium. A 5-year MYGA can only pay 2-3% commission for the same reason.
Higher premium bonus matched with steeper recapture. A 10% premium bonus on a 14-year FIA is funded by the carrier's commission budget. If you surrender early, the bonus is recaptured precisely because the carrier needed those funds to amortize the commission they already paid.
Rider load. Income riders carry annual fees (0.75-1.25%) on top of base product cost. Part of that rider fee budget is distribution cost to the producer.

The rider-load + bonus + commission triangle

For multi-rider FIAs, the three components interact:

Carrier prices a base FIA that would credit ~3.5% to the buyer at a 2% commission level
To increase commission to 6%, the carrier reduces the credited cap or adds a longer surrender schedule
To make the product sellable despite the reduced cap, they bolt on a 10% premium bonus + an income rider with a 7% benefit-base roll-up
The bonus and rider make the product LOOK better; the longer surrender + lower cap pay for the commission

This is not fraud. It's how the industry mathematically funds distribution. But the buyer needs to understand that the bonus, the rider, the cap, the surrender period, and the commission are all parts of one connected economic equation. You can't change one without changing the others.

Why "fee-only" often costs the buyer MORE money

The fee-only fiduciary alternative to commission-based annuity placement is typically:

Advisor charges 1% AUM annually
You buy the same annuity through a no-load or low-load distribution channel (DPL Financial Partners, etc.) at a slightly lower commission, OR you skip the annuity entirely and use the fee-only portfolio

The 1% AUM fee sounds cheaper than a 5% one-time commission. The compound math says otherwise:

Approach	Year 1 cost	20-year total cost on $500K
Commission-based 5% MYGA	$25,000 (one-time, embedded)	$25,000
Fee-only 1% AUM on $500K starting balance	$5,000	~$130,000-$160,000 depending on growth rate
Commission-based 6% FIA	$30,000 (one-time, embedded)	$30,000
Fee-only 1% AUM with portfolio	$5,000	~$130,000-$160,000

The fee-only annual model costs the buyer 4-5x more over 20 years on the same dollar base. The math is just compounding — 1% annually on a growing balance for 20 years adds up.

This is not an argument against fee-only advisors. There are real situations where ongoing portfolio management adds value worth more than the cumulative fee. But the claim that fee-only is automatically "cheaper for the buyer" because there's no commission is wrong. It is cheaper in year 1 and more expensive starting around year 6.

How to verify your producer's commission

Three ways to check what your independent producer is actually earning:

Ask directly. Independent producers should be willing to disclose the commission percentage on the specific product being recommended. If they refuse, that's a red flag.
Compare across products. Ask the producer to show you both a MYGA at 2% commission and an FIA at 6% commission for the same dollar amount. If they only recommend the higher-commission product, ask why.
Check the carrier's commission schedule. NAIC-filed product disclosures sometimes include compensation ranges. State insurance departments publish certain filings.

Hans's commission policy

For full transparency: Hans is paid by the carrier when a client buys an annuity. The commission depends on the product and ranges from ~1.5% (short MYGAs) to ~6% (long-surrender FIAs with riders). Hans's preference is to recommend the simplest product that solves the buyer's actual problem — which usually means MYGAs and SPIAs at the lower end of the commission spectrum.

You do not pay Hans separately. There is no AUM fee. If a recommendation feels skewed toward a high-commission product, ask Hans to show you the lower-commission alternative and explain why he picked the more complex one. Independent producers earn trust by being willing to lose a sale to a simpler product if it's the right answer.

Red flags that commission is driving the recommendation

You're being pushed toward a 14-year surrender FIA when you said you might need access in 7 years
The producer dismisses MYGAs as "outdated" or "boring" without explaining why an FIA solves a problem you actually have
You're being told the income rider "doesn't really cost you anything" — it always does, that's how the rider gets funded
The producer refuses to disclose commission percentages
The "premium bonus" is emphasized without equal emphasis on the bonus recapture schedule
You're being asked to roll out of a perfectly good existing MYGA into a "better" FIA — the better part is the new commission

What honest commission disclosure looks like

An honest producer conversation includes:

Which products in the comparison pay the highest commission to me
Why I'm recommending the specific product I am (vs. the higher- or lower-commission alternative)
What you give up if you take a lower-commission product instead
What I'd recommend if commission were the same on every option

If you can have that conversation, you can trust the recommendation. If not, get a second opinion.

Get the commission disclosure before you sign — not after

Independent review of your specific decision.

Most producers will tell you the commission percentage on the product they're recommending only if you ask. Hans will tell you upfront on every product, including the cheaper-commission alternatives, and explain why he's recommending what he is. Independent producers earn trust by being willing to lose a sale to a simpler product.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers

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Frequently Asked Questions

How much commission does a producer earn on a 5-year MYGA?

Typically 1.5-3.0% of premium. On a $250,000 MYGA, that's $3,750-$7,500 paid by the carrier (not the buyer). The commission is embedded in the carrier's pricing model — it shows up indirectly through the credited rate spread, not as a separate charge.

Are FIA commissions really 7%?

On the longer-surrender (10-14+ year) products with riders, yes. Some FIAs with premium bonuses and lifetime income riders pay 5-8% commission. Shorter, simpler FIAs (5-year, no rider) pay 3-4%. The longer the surrender period, the more time the carrier has to recover the commission, so the more they can pay.

Does the commission come out of my premium?

No — the carrier pays the producer directly. Your full premium goes into the contract. But the commission affects the rate, cap, or surrender schedule offered, so it indirectly affects what you earn. Higher commission products often have lower credited rates or longer surrender schedules to fund the distribution.

Is fee-only cheaper than commission for annuity buyers?

Usually no. Fee-only advisors typically charge 1% AUM annually. Over 20 years on $500,000, that's $130-160K cumulative. A one-time 5% commission on the same amount is $25K. Fee-only is cheaper in year 1 and more expensive by year 6.

Why do whole life policies pay 50-110% commission?

Whole life is structurally different — the carrier recovers commission over 20-30 years of premium payments, not from a single premium up front. The high first-year commission reflects the carrier's long-term economics, but it also explains the heavy sales pressure on permanent life products.

Can I ask my producer what commission they're earning?

Yes — and you should. Any independent producer worth working with will tell you the commission percentage on the specific product they're recommending. If they refuse or get vague, that's a red flag and you should get a second opinion.

Are SPIA commissions lower than other annuity types?

Yes. SPIAs typically pay 1-3% commission. The product is simple, the surrender is irrevocable, and there's no rider load to bolt extra commission onto. That's part of why SPIAs are usually the right product for income-focused retirees — the economics are clean.

Does Hans Goldstein disclose his commission on specific recommendations?

Yes. Hans is paid by the carrier (commission ranges from ~1.5% on short MYGAs to ~6% on long-surrender FIAs) and discloses the commission range on any product he recommends. If asked to compare two products, he will tell the buyer which one pays him more — and why he's still recommending whichever option fits the buyer's situation best.