Rebate commissions to build trust

Insurance advisers who can provide rebated commissions to clients are engaging in a trust building exercise, according to Omniwealth.

The non-aligned wealth advisory group said after clients had been flogged with a suite of insurance products, income protection was often the first policy clients thought they could do without.

Omniwealth senior financial planner, Andrew Zbik, said only 31 per cent of Australians had income protection insurance, and added it should be part of a greater strategy rather than just a product.

"Using a fee-for-service model that can rebate commissions takes out the sales factor for clients. Quite often I find when clients are giving a suite of insurances I think that's the complexity of that too," he said.

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"By the time you throw in death, TPD [total and permanent disability], trauma, and income protection, the clients have been flogged with a suite of products.

"When I state to the client I earn no income from this and it would be negligent for me to create a greater financial strategy for them without protecting their income producing asset they understand it's one small piece of the jigsaw."

He said to ensure a client could completely replace their income if they could not work for months due to injury or illness, they needed to spend three to five per cent of their income to protect themselves.

"When we show clients that relative equation all of a sudden cost isn't an issue," he said.

"So as we know income protection covers you for 75 per cent of your income and that's where we need a suite of trauma or TPD for the gap and the lump sum policies will discharge debt.

"Clients can then see how those policies interact with each other in a situation where we've replaced 100 per cent of their income and all of a sudden cost isn't an issue."