1. What is Life Insurance Commission?

Life insurance commission in Australia is the payment made to insurance brokers or agents for selling a life insurance policy. It's typically calculated as a percentage of the sum assured.

2. How Does the Calculator Work?

The calculator uses the commission formula:

Where:

• \( Sum\ Assured \) — The coverage amount of the life insurance policy in AUD
• \( Rate \) — The commission rate percentage

Explanation: The commission is calculated by multiplying the sum assured by the commission rate and dividing by 100 to convert the percentage to a decimal value.

3. Importance of Commission Calculation

Details: Accurate commission calculation is crucial for insurance brokers to understand their earnings and for clients to be aware of the costs involved in their policy.

4. Using the Calculator

Tips: Enter the sum assured in AUD and the commission rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical commission rate in Australia?
A: Commission rates vary but typically range from 20% to 130% of the first year's premium, depending on the policy type and insurer.

Q2: Are commissions regulated in Australia?
A: Yes, the Life Insurance Framework (LIF) reforms introduced in 2018 regulate commissions and other aspects of life insurance advice.

Q3: Do clients pay the commission directly?
A: No, commissions are paid by the insurer but are factored into the premium calculations.

Q4: Are there different commission structures?
A: Yes, some policies pay upfront commissions while others may have a combination of upfront and ongoing trail commissions.

Q5: How often are commissions paid?
A: This depends on the insurer's payment schedule but is typically monthly or quarterly.