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Watch out for the perks paid to brokers for selling life cover

Some brokers are pocketing commissions of as much as twice the amount you pay into a life insurance policy in the first year. As financial incentives such as this could clearly encourage a broker to recommend a particular company's product over another, be on the alert for commission when choosing a broker.

Brokers often earn a high commission in the first year of your policy, known as the initial commission, and a smaller commission every year after that, known as the renewal commission.

This paper asked insurers how much commission they paid to brokers who sell its term life insurance.

Aviva pays initial commission of up to 180pc to brokers. - or a minimum of 22pc. "The most common renewal commission is 3pc," said a spokeswoman for Aviva. "But the higher the original sale commission, the lower the renewal commission."

Irish Life typically pays brokers up to 100pc of the first annual premium as initial commission - and a renewal commission of up to 11pc in the first seven years of a policy. "The commission levels we pay to the banks are in line with what we pay brokers for selling our term life insurance policies," said a spokeswoman for Irish Life.

Friends First said the maximum initial commission paid to brokers is 100pc in the first year. In such a case, a broker would typically earn a renewal commission of 10pc a year thereafter. "While 100pc commission may seem high, a term insurance product can last for 25 years which means the broker could be talking to that client for many years," said a spokesman for Friends First.

New Ireland typically pays brokers an initial commission of 100pc, followed by a renewal commission of 30pc in the second year of a policy and a 3pc renewal commission thereafter.

Many life assurers now offer brokers a choice between being paid a high upfront commission - or a level commission over the lifetime of a policy.

Sunday Indo Business