Life insurance advisers can keep their current rate of commissions on policies sold before July 1 this year.

The grandfathering ruling features in draft Life Insurance Framework regulations released by Treasury last week.

On policies sold after July 1 – when the framework is expected to take effect – reduced commissions will apply.

Grandfathering will cease if a new policy is taken out by an insured.

Advisers are still required to act in clients’ best interests, which will influence how long a policy stays in force.

The draft regulation allows stamp duty to be included in policy cost calculations for a year from July 1.

And advisers have won a concession on clawback provisions, which will now exclude cases of suicide or self-harm.

The clawback will not apply if an insured reaches the age when a policy automatically ceases.

A cut in premium for a policyholder reducing health risk, such as quitting smoking, will not automatically trigger the clawback provisions.

The regulations also allow an insurer to offer a premium reduction for an insured holding the policy for a period of time without the clawback being triggered for the adviser.

Consultation on the draft regulations closes on April 28.