What happens to a IFA's commission if I cancel my Life Insurance Policy?

reddyman

This question goes out to any IFA's or those in the know.

What happens to a IFA's commission if I cancel my Life Insurance Policy?

I have taken a quote for life and critical cover for the sum of £200,000 and the insurer (L&G) have said they will pay the financial advisor £789.56 immediately.

If after 2 years I decide to cancel that policy does the IFA still get to keep that commission? After 2 years my total premium paid out will be less that the commission paid out to the advisor, so it doesnt make business sense for L&G to allow the IFA to keep it. Is my understanding of this correct?

Thanks.
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markS_3

Depends on the company but they will almost certainly "claw back" some or all initial commission from the IFA if the policy is terminated within a specified time period.

The price you pay will also include an element towards the fact that the company will not always be able to recover what they have paid out to the IFA.

The FSA has proposed that the whole business of financial service providers paying commission to direct to IFAs shouldn't be allowed in future on the basis it is the root cause of most mis-selling. Whilst the providers have "sort of" agreed in public , they are now spending huge amounts privately "lobbying" against it because they fear a significant loss of business to the likes of Tesco if they aren't allowed to bribe IFAs.

VIGILANT22

It also depends on the contract that is agreed between you and him......

VIGILANT22

[QUOTE=markS

I think it is important to understand the difference between advice and information only...

markS_3

VIGILANT22 wrote: »

It also depends on the contract that is agreed between you and him......

I don't think many consumers have much say on what is agreed between the service supplier and the "I" FA.

markS_3

VIGILANT22 wrote: »

[QUOTE=markS

I think it is important to understand the difference between advice and information only...

Advice = IFA gets commission

Information = supplier charges you the same but keeps the commission they would have paid IFA

i.e An IFA will never supply information

VIGILANT22

markS wrote: »

VIGILANT22 wrote: »

Advice = IFA gets commission

Information = supplier charges you the same but keeps the commission they would have paid IFA

i.e An IFA will never supply information

WRONG

An IFA doesn't supply information, IFA's give advice
Information only, no advice, no comeback if things go wrong.........

markS_3

VIGILANT22 wrote: »

markS wrote: »

WRONG

An IFA doesn't supply information, IFA's give advice
Information only, no advice, no comeback if things go wrong.........

Isn't that what I just said?

And actually the term in IFA-world is "execution only"
IFA's don't supply information, that comes from service providers.

edited to add: I'm not sure why I even bothered to reply to someone who seems to have made an unfeasibly large number of posts in the 2 weeks since they joined.

VIGILANT22

what's it to you whether i have 10 or 10000

VIGILANT22

markS wrote: »

VIGILANT22 wrote: »

Isn't that what I just said?

And actually the term in IFA-world is "execution only"
IFA's don't supply information, that comes from service providers.

edited to add: I'm not sure why I even bothered to reply to someone who seems to have made an unfeasibly large number of posts in the 2 weeks since they joined.[/QUO

Execution only is no advice/ie you are receiving information not advice!!

markS_3

Is there an echo in here ?