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Life Insurance SoA Cost Estimated at $1,500

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).

  • Old Risky

    Were any RISK ONLY advisers consulted. Hands up, be counted !
    The $1500 refers to the TIME taken to draft the SOA. That’s driven by ASICs compliance rules and the AFSLs interpretation of those rules
    What about a fee for the actual advice.
    And does policy implementation come at no cost to the client?
    About time advisers registered as a charity

    • GregF

      Or may as ‘not for profits’ and then get all the obscene tax perks that employees of industry super funds and unions get!

    • Squeaky_1

      Hi Old Risky. I run with an extensive and wide group of ‘risk-only’ peers in this game and I can tell you I’m not aware of ANY riskie being asked/consulted. These clowns just make up policy on the run – the evidence seems overwhelming that this is the case.

  • Jeremy Wright

    Once again ASIC is showing that they actually know very little about the Retail Life Insurance Industry and what is involved in actually getting a potential client even interested enough to discuss Life and Disability cover, right through to making and doing the 2 to 4 appointments involving Fact Finding, researching, coming up with appropriate recommendations, preparation of the SOA, getting all the relevant applications and documents prepared, discussing and making alterations based on the clients expectations and wants, filling in the applications, lodging and following up medicals, blood tests, doctors reports and the myriad of phone calls and emails that are required to keep the whole thing going to completion.

    If ASIC believe that is 10 hours work, then i dare say, they are taking short cuts that could leave them exposed to breaking their own regulations and laws.

    This is what happens when you try to talk to theorists with NIL practical experience.

    It simply does not work.

  • disqus_sxdzTFJ28Y

    Maybe ASIC also assumes that the quality of the advice from a Newbee adviser and an experienced adviser is identical. It is considered that it takes 10 years to acquire expert status. Part of the skill of the adviser is educating the client so that they actually insure to cover real needs and not just their perceived needs. This skill takes time to acquire. Why isn’t an expert paid more than a newbee?

    • John Scott

      This week, marks my 45 years in the insurance industry. I am not celebrating, instead I am counting down to my leaving in approx 4 years time. My passion is gone, thanks to Government interference for all the wrong reasons. My experience has counted for nothing, except a reduced income and more unpaid paperwork. I’m over it! JS

      • disqus_sxdzTFJ28Y

        I have sold my client base and have turned into the old guy wearing the cardigan working reduced hours. Thank God I can walk any time I want to. The thing that disappoints me most is the parallel worlds of advice, particularly when it comes to ‘intra fund’ advice. What a joke. Then there’s the product floggers on TV and Radio, offering ‘general’ advice that is so dangerous.

  • David

    Lets not bring up the time involved when a client makes a claim?
    ASIC you have been sitting in your ivory offices way to long………

  • Reality Check

    Very hard not to spot the irony here. Since the flawed and unethical behaviour implemented the LIF to get risk advice its now likely that “average family” will in the future have to pay a fee of around $1500 where before there was no cost (thanks to commission).
    More ironic is that risk advisers even with a fee and reduced commission will find providing risk advice in the future unprofitable. A lose lose for customers.
    Great work by those concerned to decimate the industry and cause greater underinsurance.