A commission paid annually by a life company to an insurance intermediary based on the value of a PRSA held by a client of the intermediary is called which type of commission?

• A. Initial
• B. Advance
• C. Trail
• D. Close

Answer: (C)

Trail commissions are ongoing, annual payments to an insurance intermediary that reflect the value of the client’s PRSA and the ongoing servicing of that policy. They’re paid every year for as long as the policy remains in force and the intermediary continues to provide advice and administration, aligning remuneration with the continuing relationship rather than a one-off sale. This is different from initial commissions, which are paid once at sale; advance commissions, which are paid upfront or as a prepayment against future trails; and terms like close, which aren’t the standard form of PRSA remuneration. So the annual, value-based, ongoing payment is described as trail.