Tackle life in­sur­ance rort

Midwest Times - - PERSONAL FINANCE - Nick Bru­in­ing and Neale Prior

Let us let you in on a lit­tle se­cret that some old-school fi­nan­cial plan­ners and mobs like AMP don’t want you to know about.

There is a good chance you will be able to get back com­mis­sions you never see but which are now paid ev­ery year on your life in­sur­ance to a fi­nan­cial plan­ner or a fi­nan­cial plan­ning firm.

It can also ap­ply to some other old-style fi­nan­cial prod­ucts on which a plan­ner might still be col­lect­ing an an­nual com­mis­sion for tip­ping you into.

Or fail­ing that, you might be able to put in place ar­range­ments where a de­cent plan­ner will re­bate those com­mis­sions old-school plan­ners are re­ceiv­ing each year for do­ing no work.

Many fi­nan­cial plan­ning firms build handy re­tire­ment lega­cies from con­tin­u­ing com­mis­sions on fi­nan­cial prod­ucts they might have flogged to you years or decades ago.

Very of­ten those com­mis­sions started go­ing to an­other fi­nan­cial plan­ning firm when the plan­ner you saw de­cided to re­tire, flog their busi­ness and head to their lux­ury apart­ment on the Gold Coast.

Un­less you think you’re get­ting value from a fi­nan­cial plan­ner, you re­ally shouldn’t be pay­ing them money and bol­ster­ing the value of their op­er­a­tion years af­ter they pro­vided you a ser­vice.

Your chance to save money comes from the mod­erni­sa­tion of some as­pects of the fi­nan­cial plan­ning in­dus­try and some fi­nan­cial prod­ucts over the course of this decade and some life in­sur­ance groups ac­cept­ing that their in­dus­try needs to be dragged out of the dark ages of the 1970s.

But like all things in the de­lib­er­ately com­pli­cated area of life in­sur­ance, there is not a sim­ple an­swer.

There is no uni­form way to stop pay­ing a fi­nan­cial plan­ner a con­tin­u­ing com­mis­sion for hav­ing helped you a decade or more ago.

Rather, it de­pends on the com­pany in­volved and even the prod­uct in­volved.

The sim­plest way can be if your life in­sur­ance is through groups such as BT, Maple Brown, Colo­nial First State and OnePath and you have a prod­uct where they will re­bate com­mis­sions to you if you tell them you’re no longer us­ing the ad­viser. In­stead of the com­mis­sion be­ing paid to the fi­nan­cial plan­ner who tipped you into the prod­uct, the part of your pre­mium that was pre­vi­ously paid out as com­mis­sion can gen­er­ally be re­funded to you.

Or the in­surer can charge less for the prod­ucts be­cause there is not a big trail­ing com­mis­sion built in.

Ei­ther way, you end up in front be­cause the cost of your in­sur­ance can go down.

This is not only good for the house­hold bud­get, it max­imises fi­nan­cial choices as we get older.

Rapidly ris­ing pre­mi­ums can make peo­ple de­cide to get out of in­sur­ance in their late 50s.

Cut­ting out life in­sur­ance might be OK if you’re on top of your mort­gage and your kids are off your hands.

But there are plenty of us who still have peo­ple who will fi­nan­cially suf­fer if we die.

The fi­nan­cial plan­ner might not like the fact that you’ve cut off the com­mis­sion, but they can hardly claim to be de­serv­ing of such pay­ments if you haven’t seen them for a long time and have no rea­son to keep pay­ing them.

It can be a bit more com­pli­cated with fi­nan­cial ser­vices groups AMP, Chal­lenger, Zurich and Mac­quarie.

They refuse to re­bate com­mis­sions to clients who choose to dis­con­nect the ad­viser, in­stead ei­ther keep­ing it for them­selves or al­low­ing the lucky fi­nan­cial plan­ning firm to re­ceive money for noth­ing.

But there are ways you can get back at them with the help of com­mis­sion re­bate ser­vices or with the help of a good fi­nan­cial plan­ners will­ing to of­fer proper ser­vice.

Like all things in the de­lib­er­ately com­pli­cated area of life in­sur­ance, there is not a sim­ple an­swer.

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