What commission-free insurance actually saves you

Most Australians with personal insurance arranged through a financial adviser are paying a commission embedded in every premium — and most have no idea. It doesn't show up as a separate line item. It doesn't come with a note explaining what it is. It just quietly inflates the cost of your cover, year after year, for as long as you hold the policy.

As a fee-only firm, Diligent Financial Planning doesn't accept insurance commissions. We charge a transparent, agreed fee for our work and arrange your insurance at the lower, commission-free premium rate. This article explains exactly what that looks like in practice — including what we charge, what a commission-based adviser earns, and two illustrative client examples with the numbers in full.

How commission actually works

When a financial adviser arranges an insurance policy and accepts commission, the insurer pays that adviser a percentage of your premium. Under ASIC's current life insurance remuneration framework, the maximum upfront commission payable is 66% of the first year's premium, with an ongoing trail of 22% of the premium in each subsequent year the policy remains active.

The critical point is that this commission isn't paid by the insurer from their own margin. It's built into the premium you pay. The same insurer, the same policy, the same cover — two different premium rates depending on whether commission is included or not. Many advisers offer their advice at no upfront cost because the commission embedded in your premium effectively funds their business. The advice isn't free. It's just billed invisibly.

How Diligent FP works instead

Our model is straightforward. We charge fixed, transparent fees for the work we do and accept no commissions from insurers. That means your policy is arranged at the nil-commission premium rate from day one — and renews at that lower rate every year going forward.

For a typical insurance engagement, our fees are:

In the case study below, both clients were advised and implemented under a single engagement. Total Diligent FP fees for both: $4,950.

The case study: same insurer, same cover, two scenarios

In April 2026, we ran comparison quotes through NEOS Protection for two clients — shown here with fictionalised names — illustrating their premiums with and without commission on identical cover. Both are Victorian residents, non-smokers, with standard underwriting and no health loadings applied.

Cover in place — NEOS Protection, both clients

All covers include the Indexation Benefit, linked to CPI or 5% p.a., whichever is greater. Income Support has an 8-week waiting period with an Increasing Claims Option. The projection below uses NEOS Protection's published premium rates as at April 2026, with commission set at the maximum permissible rate versus nil. The insurer, policy terms, and cover amounts are identical in both scenarios.

Year-by-year: the premium difference

Michael Hargreaves — Sports Coach, Age 39

Claire Sorensen — Senior Manager, Age 34

Now add the fees — and the honest comparison

The premium saving above assumes neither adviser charges anything extra. That's not realistic. A commission-based adviser funds their work through the commission. We charge a fee. So the honest question is: what does each model actually cost these two clients in total, once everything is on the table?

Michael and Claire were advised together as part of a single engagement. Our total fee covering both clients — plan, analysis, pre-assessment, and implementation — was $4,950.

Total cost over 10 years — both models, both clients

When does the $4,950 fee pay for itself?

The combined annual premium savings in Year 1 alone are $3,915 — $2,561 for Michael and $1,354 for Claire. By the end of Year 2, their combined savings have reached $8,349, comfortably clearing the $4,950 fee. From that point forward, every dollar saved is a net gain.

To put that another way: if Michael and Claire hold their cover for 10 years — which for policies of this type is a conservative assumption — the $4,950 fee generates a net return of $71,601. That's a return of more than 14 times the cost of the advice, on identical cover from the same insurer.

What the commission-based adviser would have earned

It's worth being transparent about the other side of this. The NEOS Protection premium projections itemise commission payments year by year. Here's what a commission-based adviser would have received from these two policies over 10 years — compared to the single fee we charged.

To be clear: commission-based advisers aren't doing anything wrong. Commissions are legal, regulated, and disclosed. But that $64,680 comes directly from client premiums over 10 years. It adds nothing to the cover, the claims process, or the policy terms. It simply funds the adviser's ongoing revenue — and it grows every year as premiums rise with age.

A few things worth noting

Commission-free cover isn't automatically the right answer for everyone. In some situations — typically where cash flow is tightly constrained — paying an upfront advice fee can create a genuine barrier to getting appropriate cover in place at all. We're transparent about this when it's relevant, and we'll tell you clearly if the numbers don't stack up in your circumstances.

Premium projections are estimates, not guarantees. Insurers do reprice their products, and what happens to premiums beyond 10 years will depend on factors neither we nor the insurer can control today. That said, at any given premium rate, the nil-commission version will always cost less — because the commission is a cost that adds nothing to your cover.

Finally: the right level and structure of cover is always the primary question. Getting someone into a commission-free policy that's poorly suited to their needs isn't a win. The starting point is always making sure the advice is right. How we're paid for it comes after.