How I am paid
About about $370 on a policy costing you $528 a year.
Paid once, by the carrier, out of their budget. Then about $10 a year for two years, then nothing.
- You do not pay me. The carrier does.
- Your premium is the same whether you buy through me, through a comparison site, or directly. Brokers are paid out of the carrier's own budget, not added on top of what you pay.
- It is a share of the first year
- For term life, typically somewhere between 50% and 90% of the first twelve months of premium, paid once. After that a small renewal amount for a few years, and then nothing.
- Whole life pays several times more
- Because the premium is several times larger. This is the conflict of interest in the industry, it is real, and the honest response is to say so on the front page rather than in a disclosure nobody scrolls to.
- Which is why the comparison table exists
- Three of the five rows on it end in 'buy term'. If I only ever recommended the product that pays me most, the page would look different.
Four more things worth knowing
- Your premium is not higher for using a broker
- Carriers set the price. Buying direct does not save you the commission; it just means nobody argued your case at underwriting.
- I do not charge a fee on top
- There is no advice fee, no arrangement fee, and nothing to pay me directly. If a broker asks for one, ask what the carrier is also paying them.
- Renewals are small
- A few dollars a year for a couple of years. After that a term policy pays me nothing and I am still the person you ring.
- Replacing a policy pays a new commission
- Which is why churning exists. If I ever suggest replacing cover you already hold, ask me this question out loud.