TN 9 (05-90)
RS 02505.165 How to Treat Renewal Commissions Paid on a Commuted Value Basis
Commuted value payments are earned in the same way ordinary renewal commissions are earned depending on whether the agent is an employee or self-employed (RS 02505.160).
Some insurance companies make monthly payments based on specific insurance policies written and kept in force during a preceding period. The amount is:
computed on the policies involved,
in addition to regular renewals on other policies, and
not paid on account of retirement.
In other companies, agents relinquish anticipated renewal commissions in exchange for a different benefit or specific cash amount.
Such renewal commissions are paid on a commuted value basis. There is no industry-wide standard for determining the value of relinquished renewal commissions.