Question

An insurance company pays its agents 40% commission on the first year’s premium and 5% on the second year’s premium for life insurance policies. If the premiums are 500$ per year, what is the total commission that will be paid during the two years?

Answer 1

The total commission that will be paid during the two years is $ 225

Solution:

Given that insurance company pays its agents 40% commission on the first year’s premium and 5% on the second year’s premium for life insurance policies

The premiums are 500$ per year

Commission on first year:

40% commission on the first year’s premium

Thus 40 % commission on $ 500

`\rightarrow 40 \% \text{ of } 500\\\\\rightarrow 40 \% * 500\\\\\rightarrow (40)/(100) * 500\\\\\rightarrow 200`

Thus commission paid for first year is $ 200

Commission on second year:

5 % commission on the second year’s premium

Thus 5 % commission on 500

`\rightarrow 5 \% \text{ of } 500\\\\\rightarrow 5 \% * 500\\\\\rightarrow (5)/(100) * 500 = 25`

Thus commission paid for second year is $ 25

Total commission paid = $ 200 + $ 25 = 225

Thus Total commission paid is $ 225