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  • FIRST POST
    • Jojocat
    • By Jojocat 6th Mar 18, 4:54 PM
    • 26Posts
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    Jojocat
    Broker Fee
    • #1
    • 6th Mar 18, 4:54 PM
    Broker Fee 6th Mar 18 at 4:54 PM
    I got contacted by a broker though my union re life insurance. They sent paperwork via email with a quote and I saw that the broker gets a 600 commission/fee in the first year, with a percentage in subsequent years. I think the insurance company pays this. Is this a bit too much or correct? It's for 50k over 38 years, level amount. Who gets this fee if I didn't go through a broker? Would my monthly payment be less? (I've done a few online quotes and they're all much the same as the broker's monthly quote.)
Page 1
    • Weighty1
    • By Weighty1 6th Mar 18, 5:03 PM
    • 306 Posts
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    Weighty1
    • #2
    • 6th Mar 18, 5:03 PM
    • #2
    • 6th Mar 18, 5:03 PM
    If you went direct to the insurer then they'd just keep this fee themselves for more profitable business. Some intermediaries discount their fee and this does result in a reduced premium, however, it doesn't normally make a massive difference and this often affects the service provided as they may not offer an advisory service, which means you wouldn't have the same level of protection via the financial ombudsman and would likely mean they'd not assist with writing the plan in trust (if necessary and appropriate).

    The fee is typically proportionate to the premiums paid. The bigger the premium, the bigger the fee. 600 isn't a large fee and I'd expect means your premium is around 30/month. The fact that most other brokers online are coming in with similar commission payments suggests that it's a fair level, no?
    Last edited by Weighty1; 06-03-2018 at 5:07 PM.
    • dunstonh
    • By dunstonh 6th Mar 18, 5:44 PM
    • 92,620 Posts
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    dunstonh
    • #3
    • 6th Mar 18, 5:44 PM
    • #3
    • 6th Mar 18, 5:44 PM
    Is this a bit too much or correct?
    The insurer pays the broker. You do not. You pay the premiums. The premiums will have the commission factored into them.

    Union arrangements tend to be poor value. Part of the commission goes to the union too in most cases.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Jojocat
    • By Jojocat 8th Mar 18, 2:48 PM
    • 26 Posts
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    Jojocat
    • #4
    • 8th Mar 18, 2:48 PM
    Re Broker Fee
    • #4
    • 8th Mar 18, 2:48 PM
    Thanks for replying to my question. So in this case the broker is the intermediary? Does that mean they don't get overseen by Financial Regulators? Yes the monthly fee is just under 30 and he said he'd put it in trust (no other charge).
    • Weighty1
    • By Weighty1 8th Mar 18, 3:21 PM
    • 306 Posts
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    Weighty1
    • #5
    • 8th Mar 18, 3:21 PM
    • #5
    • 8th Mar 18, 3:21 PM
    As a broker he'll be, or at least his company will be, regulated by the Financial Conduct Authority and if he's provided advice on the suitability of this plan then you'll get additional protection from the Financial Ombudsman Service if you need to complain.
    • YHM
    • By YHM 8th Mar 18, 4:09 PM
    • 516 Posts
    • 193 Thanks
    YHM
    • #6
    • 8th Mar 18, 4:09 PM
    • #6
    • 8th Mar 18, 4:09 PM
    The commission is also based on you retaining that policy for a number of years (2 or 4 generally).

    If you cancel that policy, the broker will need to pay a proportion of that back on a pro-rated basis
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
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