I refer to the report, “No-commission insurance policies available from Tuesday” (April 1). The statement that “the price difference between a DPI (Direct Purchase Insurance) and a policy bought through a financial adviser would likely be 5 per cent to 15 per cent on an annual basis” needs elaboration.
There is generally no return if a whole life policy is terminated within the first few years because the initial premiums paid are used up to pay the commission and set up the policy.
The total premiums paid as commission can amount to a year’s premium. If one year of savings is 15 per cent, two years would be 30 per cent of the premium payable.
With DPI, perhaps there would be less cancellation of insurance policies, while those insured would get at least some benefit from their initial payments upon early termination.
Perhaps consideration should be given to include general insurance such as car and home policies, which are more straightforward to decide, in the DPI initiative.
There is generally no return if a whole life policy is terminated within the first few years because the initial premiums paid are used up to pay the commission and set up the policy.
The total premiums paid as commission can amount to a year’s premium. If one year of savings is 15 per cent, two years would be 30 per cent of the premium payable.
With DPI, perhaps there would be less cancellation of insurance policies, while those insured would get at least some benefit from their initial payments upon early termination.
Perhaps consideration should be given to include general insurance such as car and home policies, which are more straightforward to decide, in the DPI initiative.
