The Financial Planning Association of Australia The Financial Planning Association of Australia

Life Insurance

Life insurance is a key part of every Australian’s financial planning. Its effective use provides significant benefits and peace of mind to Australian families, and reduces the cost to government.

Life insurance remuneration reforms

The Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 will commence on 1 January 2018, providing financial planners with certainty around remuneration when recommending life insurance solutions to clients, whilst also ensuring clients are protected by the right level of insurance cover.

The package, which takes into account concerns raised by the FPA during the consultation process, includes:

  • A transition from high upfront commissions to either a hybrid commission, level commission or Fee for Service model.
  • Starting from 1 January 2018, upfront commissions will be capped at 80%, then reduce to 70% from 1 January 2019, before settling at 60% from 1 January 2020. The FPA successfully advocated a three-month window whereby the current commission level for policy applications submitted prior to 1 January 2018 are maintained.
  • New retention clawback provisions will also commence from 1 January 2018, starting with 100% of the commission in year one and 60% in year two (no clawback in year three) of the policy. The FPA successfully advocated the introduction of certain limited circumstances under which ‘clawback’ arrangements are not intended to apply, such as in the case of self-harm by the insured, or where a premium is reduced due to a decision by the insured to quit smoking.

FPA Life Insurance Blueprint

Our view is that lasting change in the life risk sector will be driven by higher professional standards and improving the public perception of the life risk advice service offering. In particular, we aim to drive a competitive, professional, and ultimately valuable service to Australians through a sustainable model to provide life risk advice.

The FPA undertook an extensive member consultation in March 2015 which resulted in the development of the FPA Life Insurance Blueprint. The FPA used this member feedback in our negotiations with industry and the Government to find a professional, workable and balanced solution to the life insurance issues.

Using this feedback, the FPA proposed the following reform package – The FPA Life Insurance Blueprint:


FPA life insurance advice guide

Visit the FPA Member Centre to download the FPA Life Insurance Advice Guide — a comprehensive resource to support you in the area of life-risk advice.

The guide includes:

  • The ten core principles for providing best practice life-risk advice
  • Step-by-step guidance on meeting your best interest duty
  • How to apply the FPA Code of Professional Practice.
FPA Member Centre

Download a summary of the ASIC Report into life insurance advice

Download the ASIC Report

Any questions?

We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.

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