A life insurance adviser could receive $1200 less for delivering a typical service under proposed new commission rules, according to financial planning practice LifeNet (WA) director Brendan Lynch.

He says arranging $500,000 of cover for a 40-year-old couple, with $300,000 income protection, currently results in an upfront commission of $2600-$3000, depending on the insurer chosen.

“We receive 100% of this premium as arranged with the insurance company,” he says in a submission to the Parliamentary Joint Committee on Corporations and Financial Services’ life insurance inquiry. “The $3000 premium is the result of about 20-23 hours of time on implementing insurance for one couple.

“Under the proposed legislation we would receive 60%, or $1800, while undertaking the same administration time, effort and care.”

He says doing the same amount of work for less payment is not viable.

“There is no room for growth with this model,” the submission says. “Our only option is to invoice clients for the difference, an additional $1200 in the example, just to be able to continue to provide our services and sustain our staff.

“We are, in effect, introducing an out-of-pocket fee to clients who understand and have no issues with the current structure.”

Mr Lynch says consumers will not pay for advice, and therefore will not take out insurance, meaning the Federal Government will be required to pay more in health costs and other benefits.