Life, TPD, Income Protection - Adviser Commission

dynamike on 21/05/2018 - 19:58

So after literally weeks of researching life insurance, TPD and income protection and scouring hundreds of pages of PDS and financial advice PD articles I've found the product I want with the options that exactly suit my needs.

But most insurers don't allow non-advisers to access their products but rather force you to go through a financial advisers. Knowing they receive up to 30% of my premium just for the referral I'm wondering if there's not a better way?

Any financial advisers on here who like to comment?

Financial

Comments

  • mick123 on 21/05/2018 - 20:15

    who are you going with? stepped or level?
    I'm in the middle of the same research

    • dynamike on 21/05/2018 - 20:26

      Looking at levelled with benefit period up to age 65 (which very few offer to consumers). Obviously, it very much depends on your situation whether stepped or levelled is best. Read article from page 32 here for really good background: https://fpa.com.au/wp-content/uploads/2015/11/FPMagazine_Oct…

      Key things I found worthwhile to read up on and consider:

      Benefit Period: A TPD claim would most likely mean eligibility for Income Protection so consider the double up in your sums)
      Inside or outside super (found outside is typically better if you can afford it)
      TPD buyback, double or not at all
      Income Protection (IP): Indemnity or Agreed or Endorsed Agreed value
      Increase Claim Benefit
      Indexation
      Terminal Illness
      Premium Waiver
      Future Insurability Benefit
      TPD definition (e.g. Zurich have Essential and TPD Platinum where Essential has krass exclusions like must loose at least two limbs to be eligible)
      Occupation Category - ensure you're classified correctly
      Any Stamp Duty / Management fee should be against your IP as IP will likely be tax deductible

      • Eeples on 21/05/2018 - 21:36

        I haven’t read the Zurich or Essential definitions but most policies say ‘lose the use of’…. not ‘loose’ as in chopped off.

        • dynamike on 21/05/2018 - 21:47
          -1

          Yeah Zürich essential tpd is terrible:

          Requires the life insured to have suffered any one of the following severe disabilities:
          1. loss of limbs (loss of any two limbs)
          2. loss of sight (loss of sight in both eyes)
          3. both the partial loss of limbs and the partial loss of sight (loss of one limb and sight in one eye)
          4. loss of independent existence (the permanent inability to perform two of the activities of daily living) or
          5. cognitive loss (a permanent loss of intellectual capacity).

  • eriktufa on 21/05/2018 - 20:40
    -2

    FYI, the insurance commission is one way for the adviser to earn money for doing the initial work, research and implementation.

    If you are expecting a free pizza then you can do all the work yourself.

    • dynamike on 21/05/2018 - 20:50
      +1

      Exactly. So where is my free pizza?

  • bobbified on 21/05/2018 - 21:02
    -1

    Knowing they receive up to 30% of my premium just for the referral I'm wondering if there's not a better way?

    Why do you care? The commission paid to the advisor isn't out of your pocket.

    It's like getting a job through a recruiter who gets paid a huge commission. If you go direct, you wouldn't get that commission yourself anyway.

    • dynamike on 21/05/2018 - 21:12
      -1

      What kind of logic is that?? Of course it comes out of my pocket. Where do you think the money comes from?

      • kingmw on 21/05/2018 - 21:27

        While all the insured have to pay, it is the cost of doing business in the insurance industry.

        • dynamike on 21/05/2018 - 21:49
          -1

          That's the whole point of the discussion

      • bobbified on 21/05/2018 - 22:12

        Need to be realistic. You're not going to get that commission and you're not going to get it in the form of a discount either.

        The commission has been built into the premium and theere not going to unravel it for one person. That's how the insurance business works.

  • kingmw on 21/05/2018 - 21:26
    +1

    They want you to go through an advisor due to the technicalities/intricacies of the insurance. You have to understand the product completely and that it suits your needs before signing up. It's a lot more complex than health and car insurance and potentially very valuable in the long run. To explain all this, insurance companies usually outsource the entire process to advisors as they don't want to risk getting sued or getting too many complaints.

    While you (one person) have spent the time and effort to do all your background research, there are going to be at least 100 people who do not bother to this which is why advisors are required.

    • dynamike on 21/05/2018 - 21:36
      -1

      That's assuming those advisers give you proper advice which the royal commission is finally looking into. I actually approached the big life insurance brokers and despite my clarification they were just going for the sale driven by high incentives and commissions.

      I agree that by only having advisers selling their products they create a nice legal buffer which is probably the only reason they do it.

      So is the adviser commission really in the consumer interest? Absolutely not. If anything, it helps insurance companies to push dubious clauses and exclusions to avoid payouts and then refer to bad financial advice by a third party who must have mandatory indemnity insurance which is probably offered to the adviser by the same underwriter…

      So where to find an adviser who refers me with a dial back on their commission to 8% per annum as I've already done all the work?

      • Sofie519 on 22/05/2018 - 12:15
        +1

        contact a General Advice Broker, they dont have their Professional Indemnity on the line. Personal Advice Brokers MUST take into account ALL you needs, financial considerations and circumstances, and represent in your best interest. Explain to you policy working meanings as they relate to you, Issue you with a Statement of Advice and your policy is Indemnified by their Insurer for the life of the policy. Even if you went to them with exactly the policy you wanted, they need to disregard that, and assess you holistically and present you with Personal Advice, they may end up finding the policy that you presented to be suitable, but their License Authority and requirements doesnt change, just because you did your homework.

        If none of that matters to you, a General Advice Broker is one that basically says I havent taken into account anything, I dont care for your needs, circumstances or financial situation, but just placing you to this product because you chose it. Their commission is the same as a Personal Advice Broker, but I believe they will offer rebate or dial down their commissions with you willingly, as these are generally considered the cowboys & misfits of the industry, as you said, they really dont need to do much. But my guess would be no-one would dial their comms down to 8% as there are still paperwork, file retention, audit requirements etc that each policy entails. So be reasonable with dial down or rebate expectations and I'm sure you will get to desperate 'brokers' .. cos they dont get paid if they dont write anything, so you're handing them money, but you will need to bear with their inexperience and non professionalism. (I am being realistic not sarcastic, I meet these people during Industry Events all the time) …

  • Eeples on 21/05/2018 - 21:38

    Check your Super scheme…. u might already have it.

    If not, check what is offered thru your Super scheme.

  • Sofie519 on 22/05/2018 - 11:11

    Insurers that dont budget the cost of Adviser Fees in their policy, budget for marketing & TV advertising costs.

    Firstly understand the difference between Personal Advice and General Advice. Personal Insurance has become so complex and heavily regulated that the insurers are more than happy to budget the cost of adviser fees in their model.

    Unless they have a general advice license, Then they will NOT risk selling you a product that doesnt meet your needs, or is not in your best interest. … which means, this is our product, here is our PDS, buyer beware, you decide if its suitable for you.

    General Advice products provide a standard product with less options and available changes. You can contact the insurers and get a policy over the phone, and they are likely to be "INsignificantly" cheaper, but believe me when I say you will likely encounter problems when you claim (as you didnt read the fine print as to what isnt covered)

    Anyway General Advice Insurers include - Insurance Line, Real Life Insuance, Virgin Life Insurance, NRMA, HCF (they offered me a policy cos Im with with their health fund).. there are others, but basically these are the ones that issue policies over the phone, they spend money on tv & media advertising. Some Personal Advice Insurers are represented by General Advice Brokers, such as Noble Oak, Sprectrum Wealth etc, but their brokers come out giving you the impression that they are giving you advice, when in reality their license basically is the same, here are the products, even if I kinda led you to a particular Insurer, you chose, so dont blame me if it wasnt suitable, cos I never said it had to be.

    Reality is, there is value in getting a good Financial Planner or Personal Advice Insurance Adviser~

  • Sofie519 on 22/05/2018 - 13:12

    Forgot to mention, there are Financial Planners that would dial their commissions to 0 (you get the full discount), and they will charge you an upfront advice fee. (think in the thousands)

  • meumax on 22/05/2018 - 13:42
    +2

    Google "commission rebate service"

    • dynamike on 22/05/2018 - 18:57

      You legend!

      • lrsekar on 28/06/2021 - 13:44

        Hi @dynamike how did you go about choosing your financial advisor to buy insurance products?

  • lrsekar on 27/06/2021 - 21:04

    Hi @dynamike how did you go about choosing your financial advisor to buy insurance products?

  • mrtin on 04/07/2021 - 07:51

    I dial down commissions to zero when providing insurance advice. Obviously id charge a fee for the time and service.

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