General Knowledge
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Many Australians are looking for ways to reduce life insurance premiums as the cost of cover continues to rise. One option receiving increasing attention is life insurance cashback, where part of the adviser commission built into insurance premiums is returned to the policyholder.
Guide summary
What This Guide Covers
- How to reduce life insurance premiums
- What life insurance cashback is
- How commissions work in retail life insurance
- When switching or transferring a life insurance policy may allow access to cashback offers
- Where life insurance cashback providers are available in Australia
Cashback mechanics
How cashback can reduce the cost of life insurance
Retail life insurance policies in Australia are commonly distributed through financial advisers. As part of the premium you pay, insurers include an allowance for adviser commissions.
Under current industry rules, advisers may receive:
Upfront
60%
of the first year's premium
Ongoing
20%
of the premium in later years
Across policy life
25-30%
of premiums paid
Across the life of a policy, these commissions can represent roughly 25-30% of premiums paid, depending on how long the policy remains in force.
Because adviser commissions are built into the pricing of retail insurance policies, some commentators refer to them as an “invisible tax” within life insurance premiums.
A life insurance cashback arrangement occurs when an adviser or intermediary returns part of this commission to the policyholder instead of retaining it.
This means the premium charged by the insurer remains the same, but the effective cost of the insurance may be reduced because some of the commission is returned to the customer.
In other words, cashback arrangements can lower the cost of life insurance without changing the underlying policy.
This approach may allow policyholders to:
- Keep the same insurer
- Keep the same cover
- Potentially reduce the effective cost of the policy
Provider comparison
Life Insurance Cashback Providers in Australia
Several companies in Australia offer life insurance cashback or commission rebate arrangements, although structures vary significantly.
When comparing providers, it is important to understand:
- whether the cashback applies to new policies, transfers, or both
- the percentage of commission returned
- whether there are minimum commission thresholds required to be met
- whether firms are willing to meet the best available terms
- whether the cashback applies to upfront commission, trail commission, or both
| Feature | Keep Insurance | InvestSmart | Easy Refunds | Insurance Watch |
|---|---|---|---|---|
| New policies and transfers | Yes | Yes | No - transfers only | No - new policies only |
| Minimum commission threshold | None | Commission over $75 | Not clearly advertised | None |
| Guaranteed best terms | Yes | No | No | No |
| New policy cashback | 12.5% of every premium | No initial cashback, trail commission for transfers | n/a | 10% first year or 5% of each premium |
| Transferred policy cashback | 50% of commission (~10% of premium) | 0% on first $75, then 50% on remaining commission | No detailed terms advertised beyond case studies | n/a |
As always, it is worth comparing both the underlying insurance premium and the cashback structure when assessing these options.
Policy transfers
Can Switching or Transferring a Policy Reduce Premiums?
In some circumstances, customers may be able to transfer their life insurance policy to another adviser who offers a cashback or commission rebate arrangement.
When a policy is transferred:
- The insurer remains the same
- The policy terms and cover remain the same
- The servicing adviser changes
If the new adviser shares part of commission with the policyholder, this may reduce the effective cost of insurance over time.
Frequently Asked Questions
Can cashback reduce life insurance premiums?
Yes. Cashback arrangements return part of the adviser commission included in the premium to the policyholder. While the insurer's premium remains unchanged, the effective cost of the insurance may be lower.
Can I transfer my life insurance policy to another adviser?
In many cases a policy can be transferred to another adviser without changing the insurer or policy terms. If the new adviser offers a commission rebate or cashback arrangement, this may reduce the effective cost of the policy.
Why do life insurance policies include commissions?
Retail life insurance policies typically include adviser commissions within the premium structure to compensate advisers for providing advice, implementing policies, and servicing clients over time.
Is life insurance cashback allowed in Australia?
Yes. Advisers may return part of their commission to customers provided the arrangement complies with regulatory and industry requirements.
Can I reduce my life insurance premium?
Yes. In many cases life insurance premiums can be reduced by reviewing the level of cover, adjusting waiting or benefit periods, comparing insurers, or using cashback arrangements that return part of the adviser commission included in the premium.