Insurers still believe commissions for life insurance are the best payment method, even if an adviser group has switched to a fee-for-service model.

Zurich Life Australia National Manager Sales Strategies Marc Fabris says many dealer groups still plan to maintain a commission model for life insurance sales.

“The model works, and advisers always have the option of dialling down their commission,” he told insuranceNEWS.com.au.

“Zurich supports both the fee-for-service and commission payment models, but an upfront commission does cover all the work the adviser does in setting up a policy.”

Some advisers are looking at returning the upfront fee to the client as a rebate, but Mr Fabris says there are some issues with this option.

“If the adviser rebates the commission when the policy is taken out, the client may not pay any premium,” he said, “Then what happens the next year when the client suddenly is told they now have to pay a premium?”

Mr Fabris says an adviser changing a fee also has the problem of what to do when managing a claim on the policy.

“Some advisers have charged a percentage of the claim, which will work for a lump sum payment, but what happens on an income protection claim where a smaller sum is paid each week?” he said.

“The commission model works for claims and the client prefers not to be bothered dealing with extra payments to the adviser.”

Mr Fabris says charging a fee during the claim process might not be in the adviser’s best interest as it could damage ongoing professional relationships.