Better Commission Today, or Better Residuals Later?

[CongoKid]

I'm considering making a career change to the insurance industry.  As I'm trying to assess if it makes sense financially, I've realized I could use some help.  Here's the issue:

The main product I will sell is disability insurance.  The insurer offers its agents a choice between two commission structures.  The first option is to receive a commission of 95% of the premiums in the year the policy is sold, then residual commissions of 10% of the premiums for the next 5 years, followed by residual commissions of 5% of the premiums thereafter.  The second option is to receive a commission of 20% of the premiums in the first year and residuals of 20% for every year thereafter. 

The annual renewal rate of the policies is about 90%, so the basis of the residuals erodes over time. 

I am leaning towards the higher upfront commission option simply because it feels like it would allow me more personal control over those funds....which I could then steer into other investments that generate passive income (real estate, index funds, etc).    Does this seem like the right decision?  Or do you think it's better to go for the second option with higher residuals?

[Rewdoalb]

Generally when they go to the trouble to give 2 options like that, you will find them to be mathematically similar.

If that seems true, it's based on your style and preference. I would choose more up front. Still a decent "passive" payout for later. Also it won't take as long to get solid cash flow. Others may suggest differently, especially if we have some members who have benefitted greatly from residuals.

[JustGettingStarted1980]

Better a bird in hand. Who knows if you'll work there 3-4 years later?

[2Birds1Stone]

Better a bird in hand. Who knows if you'll work there 3-4 years later?

100%

[Noahjoe]

Source: I sold disability insurance. Went from associate to a Coordinator position in charge of a few counties worth of business inside a few months.

I'd take the money up front. People cancel these types of policies at a pretty good clip, so I'd rather have the money now than rely on residuals. However, your residuals pay out even after you quit the gig. I've been out of that game for 7 years and still get a hefty $15 a month from the few policies that are still in effect. Residuals are what can make you rich, if you're not smart enough to invest your larger up front commission.

If you're going into commission only sales like Aflac/etc however, I'll warn you to beware. They'll hire anyone that can fog a mirror and will push you to sell to relatives really hard. It felt slimy to me, and the sales tactics were also pretty underhanded. If you're in a saturated market with high turnover then business owners have probably seen dozens like you. It can be hard to make an impact. The attrition rate in the first year of the place I worked at was 95%.

[CongoKid]

Thanks all....good points and advice.  Much appreciated!