Do insurance brokers charge a fee?
Do insurance brokers charge a fee? Great question.
Insurance Brokers specialise in helping people finding suitable insurance and in risk management. During this process, Insurance Brokers may or may not charge a fee, typically referred to as a Broker Fee which operates as a fee-for-service basis. Insurance Brokers may receive remuneration in a few different ways; Broker Fees and commission on insurance policies sold are the two major ways insurance brokers get paid.
Remember, the role of an insurance broker is to work for their client to help them understand the risks that they face, to find insurance products and services that will help to reduce the potential impact of these risks.
Broker Fee or Fee-For-Service:
Insurance Brokers that operate under a Broker Fee or Fee-For-Service model means that these fees are determined by the insurance broker. Broker Fees can be negotiated between the broker and the client.
Commissions on Insurance Policies
Commissions are payments that an Insurance Broker receives from the insurance company for the sale of a policy to their clients. All commissions are required to be clearly communicated with clients via Financial Service Guides (FSG) or a Product Disclosure Statement (PDS). Some commissions may reward the broker with a higher initial payment and a lower trailing commission.
Insurance brokers are required to communicate the fees charged for the services provided. There should be no hidden costs. Fees are required to be set out in the Financial Services Guide (FSG), Product Disclosure Statement (PDS) or where an Insurance Broker has provided you with personal financial advice, then the fees and costs associated with their advice will be set out in your personalised Statement of Advice.
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