Commission rebate on income protection insurance?

40 hours! Thats like a whole week! Surely, they would be able to learn everything in that time

Well - these agribusiness investments wont sell themselves!

Very cynical but thank you for lightening it up a little

SM

 

There are some financial planners who actually rebate all commissions including commissions from insurance policies written.

They just charge a flat fee of say $3,500 pa for continuous market updates on market economics and new investments coming onto the market and if they are suitable to your needs. So no matter what level of business you have with them 10,000,000 or 10,000 it costs the same $3,500 or some other figure depending on the firm used.

Look around there's a few out there.

 

The good thing about a 'fee for service' model is that the planner needs to do some work to keep making money. Especially useful if you want a planner actively involved in managing your portfolio.

I am not sure if it works the same way with insurance, as there is no money in it for the brokers (financial planner who writes the insurance) as they would get no ongoing commission.

I think with insurance, it is a case of cheaper necessarily isn't better!

 

Absolutely Superman,

Income Protection is absolutely a case of you get what you pay for.
If you think your getting a cheap policy, you'd be absolutely right.
The more you pay the more bells and whistles you get.

If you want a policy which is basic you pay a basic amount, if you want a premium policy with all the add-ons you will pay for it.

I guess it's the same story with health insurance...

It's interesting that no one has talked about level premiums...

Cheers,

Dan

 

Hi EMP,

There's some great info on the post from some great people, so perhaps I'm covering something already covered but two key points from my POV would be -

1) Compare the price and tax deduction

If you're on a high MTR and can get 40-45% of the premium back, sometimes there's a significant cashflow benefit than holding the IP cover through super (15% MTR)

2) DEFINATELY get the commission reduced

Commission is built into all premiums as you have to be licensed to 'sell' it and this is the way insurance providers pay Planners. However - Planners can certainly elect to receive less commission, both upfront and ongoing - AND THEY SHOULD especially if you know what you're after.

The discount on COMMINSURE for eg is this - normally advisers get the standard 115% Upfront and 10% Ongoing. If an adviser choses the Upfront Commission of 60% Upfront & 10% Ongoing, you'd get 10% for the life of your policy. 0% going to an adviser on both, and you'd get 25% off.

Now, couple this with Multi-packing discounts (ie you grab IP & Trauma or something), Family packing discounts (ie you and your wife/hubby take out cover through the same insurer), Volume discounts (i.e. if you get a certain amount of cover) then you really start to nail some good savings.

Sorry, got a bit carried away. To me it's actually a little exciting when you start showing someone how to knock off 20-35% each and every years premium. Adds up when your paying it for 15 years.

Not sure if advisers are too keen on this but I'm not too keen on many advisers myself (and I'm an FP - though it's only a small part of what the firm I work for actually does and I've got a little more than the 40 hour certificate someone mentioned).

 

Thanks, Property WA. I've already got the policy (the original post was made long ago) and I went with ING as the insurer and YourShare as "adviser", so they will rebate half of the commissions to me every year. They told me that ING have 4 different commission options (different combinations of upfront and trailing percentages), but they never told me that there was an option of NO commissions. I suppose, even if there was, what would be in it for them (YourShare)?

I've also contacted a few financial advisors (real ones, not the "non-advice advisors") and none of them were willing to even rebate any commission, let alone drop it entirely. Maybe if I was a really good client and had paid them thousands of dollars some would, but then that's obviously not worth it unless I needed their advice anyway and the whole point is that I don't.

Anyway, the whole policy worked out quite cheaply in the end. After the commission rebate and tax deduction I would be paying less than $200 for the first year - can't complain about that! Of course, it will increase next year.

 

Good to hear EMP. glad you managed to sift through it all and find a way to secure the cover at an appropriate price.

Cannot believe that the advisers you contact wouldn't drop some commission. This is just another reason why our industry has so many problems and critics.

In the end - ING - a solid choice I believe (not that thats advice of course). We regularly use their IP & Trauma cover for clients and their features score well on the comparison software.

 

I was sold an income protection policy with MLC a couple of years ago. I asked the adviser about the commission and was laughed at and bullied into signing up. (I was never given a financial services guide, etc by the broker either, but I guess that’s another storey.) I don't have a problem with the policy, but I'm sure that I'm on the highest premium/rebate structure. It's a level premium, so other than finding someone who will rebate some of the trail commissions, I doubt there's much I can do about getting onto a lower or no rebate structure. Is this correct?

I do, however, need to organise income protection for my wife and life insurance and TPD for both of us. I am wondering how to compare the cost and features of various policies and their different payment structures (level vs. stepped for example) without the help of a broker. Is there a general consensus of what method is best to get (some of) the initial and ongoing commission rebated for these products? How much of the initial commission could I expect to get back from a company like YourShare?

I have just found this forum and what’s on this topic alone has been of great help. Thank you in advance for your replies.

 

Hi GeoQuack,

I'm glad this thread helped someone else. I'm by no means an expert on this subject, so see what others say, but I never got the impression that an insurance company will vary their premiums for you. A good way to check would be to simply get a quote from the same insurer through a different broker with all the exact same options. What they will vary is how they pay commission to your adviser. Normally, as a client, you shouldn't even be concerned about that, so they don't mention it in any brochure. It's for the adviser to choose. When the "adviser" is really a discount broker, though, you can ask them for those details. YourShare is the only service I've found that will do this, but there might be others. They rebate 50% of whatever commissions they get - the structure is your choice. I went for the level commission, since it provides the highest rebate over the long term and I intend to hold this policy for a while.

As far as comparing features I think you can do it without a broker by deciding what it is that you need and reading the PDSes carefully. I can't give any advice on this, but I can tell you my own thought process. I was looking for a policy for a "worst case scenario" where I would never be able to work again and would potentially live off the benefits of this policy for 20 years. Therefore, to me, indexation of benefits was essential, including while on claim. All the other optional features just weren't worth it to me - sure, they make you feel like everything is covered, but I wasn't really after that. I just wanted to protect myself against the worst case and was willing to suffer some financial loss due to a temporary illness (self-insure for that, basically). Because of this I also went for a 90 day waiting period to get a lower premium.

Hope this helps.