September 12, 2017
The cost of producing a life insurance Statement of Advice (SoA) has been estimated to be about $1500 and takes up to ten hours work, according to ASIC.
The regulator made the estimate in a recent response to Questions on Notice from the PJC inquiry into life insurance which had asked about the length of time and cost to prepare an SoA for an ‘average’ family of two parents with full time jobs, two children and a mortgage.
ASIC stated that while most life insurance advice was paid through commissions to the advisers from the insurer, where advisers did charge a fee “…information we have from industry indicates a range of charges for the preparation of the advice, from $550 to $1,500” for the SoA described by the PJC.
“…information we have from industry indicates a range of charges…from $550 to $1,500”
In terms of time required to produce that SoA, ASIC stated, that based on information it had received from advisers, it would take between five to ten hours to prepare.
“This estimate takes into account the time required for the first meeting with the clients, research, data entry, applications, administration and the presentation of the advice to the clients once the statement of advice is prepared,” ASIC added.
“This estimate is a very general one, as there are many variables that may affect the time need to prepare advice,” ASIC stated, adding that these variable included a consideration of existing products, underwriting requirements and dealing with high risk occupations that may need to be individually rated.
ASIC’s comments follow its’ recent defence of an example life insurance SoA, which placed commissions at the front of the document, with the regulator stating it had done so after following instructions from the Government (see: ASIC Defends SoA Disclosure).