Commissions problematic post-LIF says InvestSmart

Mike Taylor

Managing Editor and Publisher

23 April 2026

Life insurance commissions have again emerged as an issue with online financial advice group InvestSmart claiming most Australians don’t realise how much of their insurance premiums are paying for ongoing commissions.

The company has asserted that “households [are] losing thousands over time in built in commissions” while pointing to its own insurance ‘cashback’ service.

It claims “Australians are paying an estimated $1.6 billion to $2.25 billion a year in life insurance commissions, with ongoing payments to advisers and brokers often continuing long after their policy was arranged”.

The InvestSmart statement then pointed to the post-Life Insurance Framework situation where advisers and brokers can receive up to 60% of the first year’s premium upfront, and up to 20% of the premium every year ongoing.

InvestSmart chief executive, Ron Hodge said many Australians might not realise the commission payments continue automatically and said this ought to prompt questions about whether Australians are getting value for money.

“Most Australians don’t realise that a good chunk of their insurance premium isn’t paying for cover at all, it’s paying an ongoing commission Hodge said in a statement.

“Up to 20 per cent of the premium each year can go to a financial adviser, insurance broker or other financial intermediaries. Those payments continue even if no advice is being delivered.”

“For someone paying $3,000 to $4,000 a year in premiums, that can mean $600 to $800 annually in commissions. Over a decade, that’s thousands of dollars.”

Hodge said ongoing commissions can be appropriate where clients are receiving ongoing advice and support but many Australians do not realise the payments continue unless arrangements are actively changed.

Referencing the LIF arrangements, he said that what had begun as a consumer protection “has resulted in a system where commissions can continue long after the advice relationship has ended”.