How we get paid, and how your adviser gets paid

Nobody in this chain works for nothing, and the money all comes from the same place — your premium. Here is the order it moves in.

1. 1

   You pay a premium to the insurer

   Monthly or annually. The premium is set by the insurer’s rates for your age, sex, smoking status, occupation and health, plus a policy fee, plus whatever loading underwriting applies.

2. 2

   The insurer pays commission to the adviser firm

   Typically an upfront commission in the first year, calculated as a percentage of the first year’s premium, and then a smaller ongoing renewal commission for as long as the policy stays in force. The insurer pays it, not you — but it is priced into the product.

3. 3

   The adviser firm pays us a referral fee

   We are paid by Marble Life for passing on an enquiry. That is our only source of income from this site. We are not paid by any insurer, we hold no commission arrangements with insurers, and no insurer can buy placement, ranking or wording here.

We are deliberately not publishing commission percentages. Rates differ between insurers, between products, between firms and between individual agreements, and any single number we printed would be wrong for most readers within a year. What does not change is the structure — upfront, renewal, clawback — and the structure is what tells you where the incentives sit.

This is the single most misunderstood thing about buying insurance in New Zealand, and the misunderstanding costs people money.

Insurers price a product once, for a distribution channel, and the cost of distribution is inside that price. If you buy the same product directly from an insurer instead of through an adviser, the insurer does not hand you the adviser’s commission as a discount. It keeps it, or it spends it on the advertising that brought you to the website. The premium is the premium.

• Going direct does not reduce your premium on an adviser-distributed product. There is no “no-adviser” rate to ask for.
• Direct-to-consumer insurers can be cheaper, but that is a different product with different underwriting, different definitions and often a much thinner claims process — not the same policy with the commission stripped out.
• What you give up by going direct is the person who reads the wording, knows which insurer will take your health history on the best terms, and turns up when you claim. You pay for that either way.
• Bank-branded cover is not an exception. It is almost always underwritten by a third-party insurer, sold by staff who are paid to sell it, with the cost of that distribution priced in.

So the honest framing is not “advised costs more”. It is “you are paying for distribution regardless — decide whether you would rather have an adviser or an advertising budget”.

When an insurer pays an adviser upfront commission, it does not pay it unconditionally. There is normally a clawback period — a defined window at the start of the policy during which, if the policy lapses, is cancelled or is replaced, the adviser has to repay some or all of the commission. The repayment usually scales down the longer the policy has run.

The practical consequence is worth understanding, because it is one of the few incentives in this market that points in your favour.

• An adviser who writes cover you cannot afford loses money when you cancel it three months later. Selling you a premium you will not sustain is bad business for them, not just for you.
• An adviser has a reason to check the premium is affordable at the level it will reach, not just at the level it starts. That matters most with stepped premiums, which climb with age.
• An adviser has a reason to place you with an insurer likely to accept you on standard terms, because a policy issued with an unexpected loading is a policy that gets cancelled.
• It also creates an argument against switching. If moving you to a better policy costs the adviser a clawback, there is a quiet reason not to raise it. Ask directly whether switching would trigger a clawback for them.

An adviser is paid a percentage of the premium. A bigger premium means a bigger payment. That is a real conflict of interest and no amount of process language makes it disappear.

It shows up in specific, identifiable ways. These are the ones to watch for.

• Recommending a higher sum insured than the numbers support, because more cover means more premium.
• Bundling in trauma, TPD and income protection when the actual gap is one of them, and the others are being carried by the budget rather than the need.
• Recommending level premiums where stepped would suit better, or the reverse — the two produce very different first-year premiums and therefore very different commission.
• Preferring a product with a longer or richer commission structure over a cheaper equivalent, where the difference to you is marginal and the difference to them is not.
• Recommending a replacement policy that is only slightly better, because a replacement generates fresh upfront commission and resets the clawback clock.

None of that means advisers are dishonest. Most are not, and the good ones will raise the conflict before you do. It means you should be able to see the incentive clearly enough to test the recommendation against it.

New Zealand’s financial advice regime puts three things in the way of that conflict. They are not perfect, but they are real, they are enforceable and they are free to use.

A legal duty to put your interests first

Anyone giving regulated financial advice in New Zealand must do so under a Financial Advice Provider licence and must give priority to the client’s interests where their own interests conflict. They must also have the competence, knowledge and skill for the advice they are giving, and must exercise care, diligence and skill. That duty is a legal obligation, not a marketing promise, and it is the reason a recommendation should come with reasoning you can inspect.

Disclosure you are entitled to receive

Advisers must disclose how they are paid, what commissions and incentives they receive, any conflicts of interest, the scope of what they can advise on, their complaints process and their dispute resolution scheme. You do not have to ask nicely for this. It is an entitlement, it must come at the right points in the process, and an adviser who is evasive about it has told you something useful.

Free, independent dispute resolution

Every licensed insurer and every financial adviser must belong to an approved dispute resolution scheme — IFSO, FSCL, FDRS or the Banking Ombudsman. You complain to the firm first. If you are not satisfied, you escalate to their scheme, and it costs you nothing. The scheme can make decisions binding on the firm. Ask which scheme an adviser belongs to before you engage them; the answer is also on the Financial Service Providers Register.

Conduct is also regulated at the insurer end. Licensed insurers have been operating under the Conduct of Financial Institutions regime since 31 March 2025, which requires a fair conduct programme covering how products are designed, sold and administered — including how intermediaries are incentivised.

Ask these in the first conversation, before any application. A good adviser will answer without hesitation and will usually be pleased you asked. Write the answers down.

1. 1How are you paid on this recommendation — upfront commission, renewal commission, a fee, or a combination? Roughly what proportion is upfront?
2. 2Does the commission you receive differ between the insurers you are recommending? If so, which pays you most, and why is your recommendation not that one?
3. 3Is there a clawback period on this policy, how long is it, and would you have to repay commission if I cancelled in the first year or two?
4. 4Am I replacing existing cover? If so, does that trigger a clawback for anyone, and have you compared the old wording against the new one benefit by benefit?
5. 5What would change about your remuneration if I halved the sum insured, or dropped one of these benefits?
6. 6Which insurers can you advise on, and which ones can you not? What are you not allowed to recommend?
7. 7Do you or your firm have any ownership relationship with any insurer, or any volume-based bonus, conference or incentive arrangement?
8. 8Which dispute resolution scheme do you belong to, and what is your FSP number so I can look you up?
9. 9Can I have your disclosure information and the recommendation in writing, including the reasons you rejected the alternatives?

Because no one else in this market does, and the silence is doing damage. Readers assume advised cover carries a mark-up that direct cover does not. It does not. Readers assume an adviser is neutral. They are not, and the useful response to that is disclosure rather than pretence.

We would rather tell you where our money comes from and let you weigh what we write accordingly. If that means you take the research and go to an adviser you found yourself, that is a perfectly good outcome. The Financial Service Providers Register is public and searching it costs nothing.