By Steve Conley, Founder of the Academy of Life Planning

The Financial Conduct Authority (FCA) has launched a review into the pure protection insurance market, raising serious concerns about commission-driven practices. Some have criticised my vocal support for this investigation. Let me be clear: the Academy of Life Planning welcomes this review. We believe it’s long overdue.

Our Position: Transparency, Not Obfuscation

We are pro-consumer, pro-protection, and pro-transparency. We are not anti-advice. But we are unequivocally against commission-loading, particularly when it inflates premiums and compromises trust. Just as we applauded the FCA’s stance on discretionary commission in motor finance—where dealers were incentivised to charge more—we apply the same principle to the protection market. When incentives misalign with client outcomes, something must change.

Our Credibility: Decades of Experience

I have been a Chartered Insurer since the 1980s. That makes this my fifth decade as a protection market expert. I’ve worked at board level with major insurers and now lead a movement to reshape financial services from the inside out. Our Academy is home to hundreds of professionals—including many FCA-regulated advisers—committed to ethical, client-first planning.

What We Do Differently

At the Academy, around 40% of our members are regulated advisers. Many operate on a fixed-fee basis, offering no-load protection solutions. Where commission is unavoidable, some members rebate it against their fees. Others offer clients a clear choice: pay a fixed fee with no commission, or select a commission-paid policy with full disclosure. The key here is informed consent.

I personally have not been FCA-regulated for six years. When protection advice is needed, I refer clients to Academy members—or, in the public interest, to Which? Money and their preferred broker, LifeSearch. We have a standing agreement: the Academy receives no affiliate commission, and LifeSearch instead discounts the equivalent amount off the client’s premium. That’s what fairness looks like.

What the Data Shows

The cost difference between no-load and loaded protection products can be staggering. Over the life of a high-premium policy, the consumer could save tens of thousands of pounds. We’ve presented clients with both options—some choose commission, others fixed fee. The point is: they choose, transparently.

Addressing the Criticism

To those suggesting I lack knowledge of the protection market, I say this: my experience spans five decades, across multiple continents, from boardrooms to grassroots reform. We do not need to be silent to be respectful.

To those concerned that transparency undermines public confidence in protection insurance, let’s not conflate the problem with the whistleblower. It’s not transparency that’s the issue—it’s the practices being exposed.

To those asking how advisers should get paid: ethically, transparently, and in a way that clients understand. Fixed fees are one answer. Rebated commission is another. Hidden incentives are not.

To those defending outdated policies, yes—some legacy contracts have valuable features. But let’s not pretend that all switching is bad or that no-load options can’t serve clients better. Let’s trust consumers to make informed decisions, not hide behind complexity.

And to those calling this a “bland AI-generated hit piece”: dismissing uncomfortable truths doesn’t make them go away. We stand by our words because they are backed by data, integrity, and lived experience.

The Bigger Picture

The Academy is building a fairer financial system. We are creating alternatives that empower the individual, not enrich the intermediary. If we are guilty of anything, it is of believing that people deserve to understand the real cost of financial products.

The FCA’s probe is not an attack on advisers. It’s a chance to restore public trust.

And we’re here for it.

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Commission Structures in the UK Pure Protection Market

Overview: The UK’s pure protection insurance market (term life assurance, critical illness cover, income protection, and whole-of-life cover) predominantly uses commission-based remuneration for intermediaries. Under this model, insurers build commission into premiums paid to brokers or advisors, rather than charging customers an explicit fee. This practice is now under intense scrutiny by regulators due to concerns about fair value and potential consumer harm​

mondovisione.com. Below, we examine: (1) the typical commission deals for each product, (2) how commission-based costs compare to fixed-fee models over a policy’s life, (3) differences across distribution channels, (4) commentary from regulators (FCA) and industry on commission-driven issues, and (5) case examples highlighting commission-loaded vs no-commission alternatives.

1. Commission Deals by Product Type (Term, CI, IP, Whole of Life)

Term Life & Critical Illness: Insurers commonly pay high upfront commissions to intermediaries for term assurance and critical illness (CI) policies. It is standard for initial indemnity commission (paid upfront) to equal 150%–200% of the first-year premium, with some deals even higher for longer-term policies​

therightmortgage.co.uk. For example, one major insurer’s panel shows ~196% of the annual premium paid upfront on term life or life+CI cover (with 4-year commission terms)​

therightmortgage.co.uk. Another leading provider (Legal & General) likewise offers around 195% of the first-year premium as standard commission on term life or life+CI policies​

therightmortgage.co.uk. If the adviser opts for non-indemnity (trail) commission – i.e. receiving commission spread over time rather than an upfront lump sum – the total commission is higher (often equivalent to ~240–255% of one year’s premium paid over ~4 years)​

therightmortgage.co.uk. In L&G’s case, the non-indemnity commission factor for life/CI is about 244% of annual premium, versus 195% on indemnity​

therightmortgage.co.uk. In addition to initial commission, insurers typically pay a small renewal commission (trail) of around 2.5% of each premium ongoing​

cms.legalandgeneral.com, which can continue for the policy’s duration after the initial period.

Income Protection (IP): Commission structures for income protection are similar, though some insurers offer slightly different scales or options. Many insurers pay roughly the same percentage on IP as for life cover (e.g. ~196% indemnity, 245% non-indemnity over a 4-year period)​

therightmortgage.co.uk. However, some providers incentivize IP sales with even higher rates. For instance, Liverpool Victoria (LV=) has an indemnity commission of about 212.6% of annual premium on IP (with a 4-year earning period), compared to ~184–196% on its life or CI products​

therightmortgage.co.uk. Non-indemnity IP commission can exceed 260% of annual premium in such cases​

therightmortgage.co.uk. The market also allows shorter “initial commission periods” on IP if the broker prefers lower upfront risk – e.g. 2-year indemnity terms typically pay around 160%–180% of annual premium​

paradigm.co.uk. The range of standard IP commissions spans roughly 150% up to ~210% of year-one premium upfront (with ~0–5% renewal each year) depending on insurer and commission structure​

therightmortgage.co.uk​

paradigm.co.uk. Some friendly societies (British Friendly, Cirencester, etc.) use 3-year commission periods or level commissions, but the net effect is in a similar range​

paradigm.co.uk​

paradigm.co.uk.

Whole of Life Insurance: Whole-of-life (WOL) pure protection policies (including non-investment “over-50s” plans) also carry high commissions, though the calculation accounts for the policy’s expected duration. Insurers generally treat WOL like a very long-term policy with a notional term (often up to age 85–90) to determine the commission factor​

cms.legalandgeneral.com​

mandg.com. In practice, this often caps the initial commission to the first ~4 years of premiums for younger entrants. For example, one provider’s WOL plan specifies a maximum initial commission period of 48 months and an initial commission rate of 25% of each premium​

mandg.com – resulting in total commission roughly equal to 100% of the annual premium spread over 4 years. On an indemnity (upfront) basis, that 4-year commission stream might be paid as an ~84% of annual premium lump sum (present-valued)​

mandg.com. Many mainstream insurers quote WOL commission in line with their term rates: e.g. Aviva and Aegon both list ~196% indemnity / 245% non-indemnity for whole-of-life policies in standard terms​

therightmortgage.co.uk. However, for older ages or guaranteed acceptance plans, the effective commission rate may be lower since the effective term is shorter (e.g. at age 60+, the allowed commission period might be <4 years, reducing the percentage). Over-50s guaranteed acceptance plans – a subset of WOL – typically have lower headline commission (e.g. ~130% of annual premium​

therightmortgage.co.uk) but often higher embedded marketing costs. Insurers heavily promote these direct-to-consumer products with “no medical questions,” absorbing high distribution expenses (free gifts, advertising) into the pricing rather than standard broker commission. It’s worth noting that many providers offer a ~10% commission uplift for index-linked policies​

therightmortgage.co.uk (to compensate advisors for increasing premiums over time), and some large broker networks can negotiate enhanced commissions above standard scales. Overall, across term, CI, IP, and WOL, the typical commission range on pure protection is 150–200% of first-year premiums (indemnity), and roughly 200–270% if taken as level/trail commission, plus a modest renewal trail​

therightmortgage.co.uk​

cms.legalandgeneral.com.

2. Commission-Based vs Fixed-Fee Models (Cost to Consumer)

In a commission-based sale, the insurer pays the intermediary and recoups that cost through the premiums. By contrast, in a fixed-fee model, the customer pays the adviser directly (a transparent fee), and the policy is sold with nil commission, usually resulting in a lower premium from the insurer. This difference in pricing can be substantial over the life of a policy.

Premium Impact: With commission, the premium is typically the same whether you buy via an advisor or direct from the insurer – the cost of advice “is taken care of in the background” by the insurer​

curainsurance.co.uk. For example, if a policy is £10/month through a broker on commission, it would usually also be £10/month direct from the insurer​

curainsurance.co.uk. This is because insurers build in standard commission to premiums; if no intermediary is involved, the insurer often retains that cost saving as profit or marketing spend rather than automatically rebating it. However, some advisers can rebate the commission to the client as a premium discount. These “commission sacrifice” or discount broker models charge a one-off fee instead. In practice, the customer pays the adviser’s fee but enjoys significantly lower premiums for decades.

Cost Comparison: Martin Lewis’s MoneySavingExpert illustrates the stark difference. In one scenario for a 30-year-old healthy non-smoker buying £200,000 of level-term cover over 25 years, using a fee-based discount broker (commission rebated) cost about £5.13 per month, whereas using a traditional commission-based adviser cost ~£6.25 per month​

moneysavingexpert.com​

moneysavingexpert.com. Over the 25-year term, the fee-based approach’s total cost was roughly £1,560, compared to £1,880 in the commission model​

moneysavingexpert.com​

moneysavingexpert.com. In other words, paying a small upfront fee (the broker in this case charges ~£25) saves ~£320 over the life of the policy. The savings can be even larger for bigger or longer policies – MoneySavingExpert notes that despite a one-off fee, rebating commission can save “£1,000s over the life of [a] policy.”​

moneysavingexpert.com In effect, the insurer reduces the premium roughly in line with the commission that is not taken.

To visualize the difference: a typical protection policy with a ~£30/month premium might pay ~£600 in upfront commission to the seller​

moneymarketing.co.uk. If instead the client paid the adviser a flat fee (say £200) and removed the commission, the monthly premium could drop significantly (often 20–30% lower). Over a long term, the customer ends up paying much less in total even after accounting for the fee. In the above example, ~£320 saved on a 25-year policy equates to a 17% reduction in total cost by choosing a fee-based (no-commission) route.

Consumer Outcomes: It’s important to note that from the customer’s perspective, commission costs are hidden – they “pay” for advice via higher premiums rather than an invoice. This opacity can make it hard to discern value. Industry defenders often claim “using a commission-paid adviser doesn’t make your insurance cost more,” pointing out that standard premiums are the same direct or via broker​

curainsurance.co.uk. That is technically true for standard commission – insurers don’t explicitly surcharge advised sales beyond built-in pricing. However, the existence of cheaper no-commission alternatives shows that standard premiums are in fact loaded with commission costs. Crucially, some intermediaries have even arranged “loaded premiums” with insurers – where the premium is artificially higher than the base rate in order to pay extra commission to the broker​

curainsurance.co.uk. (For instance, an adviser could take an enhanced commission deal that adds say 5-10% to the customer’s premium in exchange for a higher payout.) Such practices directly increase the consumer’s cost for the same cover, purely to enrich the intermediary – a phenomenon many in the industry have condemned and called to ban​

curainsurance.co.uk​

healthcareandprotection.com. The FCA has explicitly flagged “loaded premiums” – and their impact on fair value – as an area of concern in the market study​

healthcareandprotection.com.

In summary, commission-based models typically embed significant intermediary remuneration in the premium, whereas fixed-fee (no commission) models can dramatically reduce the long-term cost of protection. Customers who are aware of this can seek out commission-free brokers or policies to save money. A number of online brokers (e.g. Cavendish Online, Moneyworld) operate on a rebate model – rebating the full commission into a lower premium in return for a one-off fee – and thus brand themselves as “discount brokers”​

moneysavingexpert.com. For consumers comfortable choosing cover without full advice, these can yield the best of both worlds: the same insurer and policy but at a fraction of the cost. Meanwhile, those going through commission-based advisors are indirectly paying for the advice via higher premiums, which can add up to hundreds or thousands of pounds more over the policy’s lifetime​

moneysavingexpert.com.

3. Distribution Channels and Commission Variations

Pure protection products are sold through various channels: independent brokers/advisers, bancassurance (high-street banks or building societies), comparison sites or aggregators, and direct-to-consumer (insurer websites or call centres). Commission structures – and ultimately pricing – can vary significantly by channel.

• Independent Brokers / Advisers: This is the dominant channel for life and health protection in the UK. Independent intermediaries receive the commissions outlined above from insurers. Many advisers offer “advised” sales, conducting a needs analysis and recommending a product, for which they take full commission. Others (including online brokers) offer “execution-only” or non-advised services – essentially just processing the application – often in exchange for rebated commission or a lower commission. As noted, brokers competing on price will rebate most commission and charge a small fee, resulting in much lower premiums for the client​moneysavingexpert.com. On the other hand, full-service brokers who provide advice and after-sales support justify the standard commission. Because broker-sold policies can be significantly cheaper to the customer than buying direct, “the cheapest life insurance quotes are usually found by going to a broker”, according to MoneySavingExpert​moneysavingexpert.com. Brokers also often have access to the whole market, ensuring competitive premiums among insurers. Within the broker channel, there may be volume-based overrides or marketing agreements (for example, large networks might get a small extra override commission or benefits from insurers), but these are generally not apparent to the customer.
• High-Street Providers (Banks/Building Societies): Banks historically sold life insurance to their mortgage customers or branch visitors, often through tied arrangements with one insurer. In such cases, the bank acts as an intermediary and typically receives commission from the insurer (or an equivalent revenue share) for each policy. However, bank-sold policies tend to be pricier for consumers. Banks often don’t rebate commission and may have higher admin costs or profit margins. In the example above, buying a term policy through a bank was quoted at £10.11/month – roughly double the premium via a discount broker – for the same cover​moneysavingexpert.com. Over 25 years that difference was £3,030 vs ~£1,560 total, meaning the bank customer would pay nearly £1,500 extra over the life of the policy​moneysavingexpert.com. The gap is striking: MoneySavingExpert cautions never to “blindly go with a policy from your bank or direct from an insurer, as these are expensive ways to buy”​moneysavingexpert.com. The reason is that banks rely on customer trust and convenience rather than price competition – they often use standard (or even loaded) commission and add high mark-ups​moneysavingexpert.com. In the past, some banks employed salaried advisers, but the product pricing still included internal commissions or transfers. Thus, high-street providers effectively pass on little to no savings to the customer, despite often limited choice of insurer.
• Comparison Sites & “Broker Platforms”: Online comparison sites (e.g. MoneySuperMarket, CompareTheMarket) allow consumers to get quotes from multiple insurers. For life insurance, these sites usually partner with brokerage firms on the back-end. The comparison site itself might be an “introducer” and receive a cut of commission, while the policy sale is completed by an intermediary who receives the commission from the insurer. The commission structure for policies sold via aggregators is usually the same standard indemnity commission – but the customer premiums can still be competitive because the aggregator forces insurers to compete on price and often uses high-volume intermediaries. The result is that comparison-site quotes are generally cheaper than bank or direct quotes, but not always as low as the specialist discount brokers. In the illustrative pricing, a “typical comparison site” showed ~£7.38/month for that sample policy (25-year, £200k level term)​moneysavingexpert.com, which is more than a broker’s own discounted price (£5–£6) but still lower than direct channels. The total cost via a comparison site in that scenario was about £1,730–£1,860 over the term​moneysavingexpert.com – a savings of a thousand+ pounds versus the direct insurer’s ~£3,200 cost​moneysavingexpert.com. Essentially, aggregators facilitate commission-based sales, but because they drive prices down and sometimes share a small portion of the commission with consumers (via cashback or voucher offers), they narrow the gap. Indeed, many advised brokers now advertise incentives (e.g. Amazon vouchers £60–£140) funded by part of their commission, to compete with non-fee comparison services​moneysavingexpert.com​moneysavingexpert.com. This is effectively a partial commission rebate in a different form.
• Direct-to-Consumer (Insurer Direct): When a consumer buys directly from an insurer – whether online or via a call center – no third-party commission is paid out. In theory, this could make the product cheaper. In practice, however, direct premiums are often higher than broker premiums. Insurers price their products to include a distribution cost, and if sold direct, they may simply retain that margin or spend it on marketing, rather than automatically discounting the premium fully. Moreover, insurers avoid undercutting the broker channel to preserve relationships. The data bears this out: MoneySavingExpert’s research found that going direct to a well-known insurer was the most expensive route for life cover – in the example, ~£10.66/month (£3,200 total over term) for the direct insurer quote​moneysavingexpert.com, even higher than the bank’s price. That was double what the exact same cover cost through a broker. Direct brands often compete on convenience or added perks, not price. For example, some direct providers bundle freebies (e.g. gift cards, health services, or frequent flyer miles) as a draw, effectively using part of the commission they didn’t pay out to fund these benefits. But unless they explicitly offer a “no-commission discount,” the underlying premium can remain steep. An illustrative contrast: one leading direct player in the UK, Beagle Street, markets “no middleman” life insurance with quick online purchase – yet independent experts found that traditional broker-sourced policies (with commission rebated) could still be cheaper for the same cover. In summary, direct-to-consumer platforms often have commission-like costs built in, but those costs go to advertising or profit instead of an adviser, meaning consumers don’t necessarily pay less.

Channel Commission Summary: In all channels, the structure of commission (indemnity vs trail, etc.) remains similar, but who ultimately benefits from the commission differs. Brokers deliver that value to the client through competition or rebates, whereas banks and direct sellers tend to retain it, leading to higher customer prices. This systemic issue is part of why the FCA is investigating whether the distribution of protection products is delivering fair value to consumers​

mondovisione.com. The best outcomes price-wise are typically via intermediaries who either reduce or refund commission, while the worst (costliest) outcomes tend to be in captive channels with full commission load and no shopping around. The distribution channel thus has a big impact on how the commission structure translates into consumer cost, even if the nominal commission percentages insurers offer are the same across channels.

4. Regulatory and Industry Insight on Commission-Driven Issues

Regulatory Focus (FCA): The Financial Conduct Authority has repeatedly voiced concerns that commission-based sales in the protection market may lead to poor consumer outcomes. In March 2025, the FCA formally launched a Market Study into the distribution of pure protection products, explicitly to examine whether commission structures are harming consumers​

mondovisione.com. The FCA noted that while protection insurance provides valuable benefits (with £4.85bn in claims paid in 2023​

fca.org.uk), hidden commissions could be distorting value – with advisers potentially incentivized to “suggest switching that may not be beneficial” and insurers possibly “raising premiums… to pay a higher commission”​

mondovisione.com. In other words, the regulator suspects that competition on advice may be driven more by commission deals than by what’s best for the customer. The study will specifically probe whether products provide fair value or if excessive commission undermines it​

mondovisione.com.

Notably, this is not an entirely new concern. Commission-fueled “churn” (policy replacement) has been on the FCA’s radar for years. In a September 2023 “Dear CEO” letter to life insurers, the FCA’s director of insurance supervision warned of “poor selling practices” in protection and highlighted that “commission structures [are] a potential driver of poor outcomes”, urging insurers to prevent the “unnecessary re-broking of policies”​

healthcareandprotection.com​

healthcareandprotection.com. The FCA made it clear that it expects insurers to scrutinize how brokers are remunerated and to intervene if commission leads to customer harm​

healthcareandprotection.com. This followed evidence that some brokers were repeatedly rewriting customers’ policies (for instance, annually or bi-annually replacing life policies with new ones) purely to earn fresh upfront commission, a practice that can leave consumers worse off (due to lost benefits or higher age-based premiums on the new policy). The FCA stated it has “seen examples of intermediaries encouraging customers to switch unnecessarily … to earn repeat commission.”​

healthcareandprotection.com Such commission-induced switching may not only cost customers more in the long run, but could result in loss of coverage (if health has deteriorated, new exclusions might apply) or other detriments – hence the FCA’s sharp focus.

“Loaded” Premiums & Fair Value: Regulators are also scrutinizing the design of commission arrangements, including the aforementioned “loaded premiums”. In its market study announcement, one of the FCA’s key questions is whether premiums have been inflated to fund higher commissions for intermediaries​

mondovisione.com. If an insurer allows an adviser to choose a higher commission option that directly makes the customer’s premium more expensive (without additional benefit to the customer), that raises a red flag for fair value. The FCA’s new Consumer Duty (in force from July 2023) requires firms to ensure their products offer fair value and that no undue costs are imposed on consumers. A commission structure that benefits the intermediary at the expense of the consumer would likely breach this principle. In fact, the FCA explicitly said “commission arrangements, such as loaded premiums, may impact price and therefore fair value outcomes for consumers.”​

healthcareandprotection.com It is seeking to understand the extent of this practice and its effects. Already, in industry events earlier in 2024, insurer executives admitted they’d be “delighted” if the regulator took action to stop loaded premiums​

healthcareandprotection.com, and leading advisor firms have called for such practices to be banned. This indicates a recognition within the industry that certain commission gaming tactics have crossed a line.

Past Precedents: The focus on commission echoes past regulatory interventions in financial services. The FCA (and its predecessor the FSA) banned commissions on investment products and pensions via the Retail Distribution Review (RDR) in 2012, largely due to concerns about mis-selling and churn in those markets. In life insurance, the issue was somewhat left open – pure protection commissions were allowed to continue post-RDR to avoid reducing access to insurance advice (the rationale was that many consumers would not pay an upfront fee for insurance advice, potentially widening the protection gap). However, the trade-off is that now regulators see similar patterns emerging. As one commentary noted, “‘Churn’ was a big concern on investment products and one of the reasons the FSA pushed for the removal of commission”​

ftadviser.com – and the protection sector is now experiencing its own version of this problem. The FCA’s current stance is not (yet) to ban commission in protection, but to investigate and ensure competition works in consumers’ interests. This could lead to new rules on disclosure, limits on commission levels or structures, or even an eventual shift to a fee-based model as default. Indeed, the FCA’s 2023 Portfolio Letter on Life Insurance (market priorities 2023-25) highlighted ensuring fair value in protection and warned insurers to monitor remuneration models closely, given the “risk of harm” from poor distribution practices​

healthcareandprotection.com​

healthcareandprotection.com.

Industry Reactions: Within the industry, there’s a mix of defensiveness and willingness to reform. Some broker networks argue that commission allows wide access to advice at no upfront cost to consumers and that most advisers act ethically to recommend suitable products. They point to relatively low complaint volumes in protection insurance as evidence that customers aren’t widely suffering detriment​

fca.org.uk. There is also a claim that commission aligns interest in policy retention, since clawback provisions mean an adviser loses commission if the policy lapses in the first 4 years (discouraging them from selling policies that a client cannot afford or will cancel quickly). However, the “relatively few complaints” so far​

fca.org.uk may also reflect that consumers often don’t realize they paid for advice via higher premiums, or don’t know when a switch wasn’t in their interest. The FCA is wary that harms may be hidden or longer-term. On the other hand, a number of high-profile advisers have publicly criticized certain commission practices. For example, some well-regarded protection specialists have exposed the issue of premium loading and voluntarily stopped using any enhanced commission that raises client premiums​

curainsurance.co.uk. Industry publications have featured debates on moving to a fee-based model; although many advisers argue that would reduce uptake of insurance (given client reluctance to pay fees), the conversation is clearly ongoing.

It’s also worth noting that international developments are influencing the UK discussion. Regulators in markets like Australia and New Zealand have tackled life insurance commission-induced churn, imposing caps and extended responsibility periods to curb relentless policy replacement. In the UK, the FCA’s study will gather evidence through 2025, with interim findings expected by end of 2025​

fca.org.uk. This suggests potential regulatory action (guidance or rule changes) in 2026 if systemic issues are confirmed. All stakeholders are on notice: FCA Executive Director Sarah Pritchard stated the FCA is “determined to ensure the market is working well and delivers good outcomes… by testing it”​

mondovisione.com, and she emphasized this does not presuppose an outcome – meaning anything from do-nothing (if all is well) to major intervention is on the table.

Key Regulatory Messages: In summary, the FCA’s and industry’s commentary highlight a few core points:

• Commission can create conflicts of interest, leading to switching (churning) of policies or selling add-ons that don’t benefit the consumer, purely to earn commission​healthcareandprotection.com. Firms must have controls to prevent this.
• Practices like premium loading for extra commission are viewed as incompatible with consumer duty and are likely to be stamped out​healthcareandprotection.com. Even the industry’s reputable players want these gone to improve trust.
• There’s an ongoing debate about the sustainability of the commission model in protection. While outright banning commission (as was done for investments) would be a seismic shift, regulators are clearly signaling that “status quo” is not acceptable if it leads to poor value. We may see measures short of a ban – such as greater transparency (disclosing to customers the commission and any premium loading), extending the clawback period (to deter short-term churn), or requiring insurers to offer nil-commission versions openly. The end goal is to ensure consumers aren’t being misled or overcharged due to behind-the-scenes remuneration arrangements.

5. Case Studies & Examples: Commission-Loaded vs No-Load Products

To illustrate the impact of commissions in real terms, consider these examples from the market:

• Discount Broker vs Direct – “Same Policy, Big Difference”: A healthy 30-year-old needs £200k of level term cover for 25 years. Via a specialist no-commission broker (who charges a £25 fee and rebates the commission), she is quoted ~£5.13 per month premium​moneysavingexpert.com. The identical policy from the same insurer, if bought direct from the insurer’s website or through a typical high-street bank, costs around £10–£11 per month​moneysavingexpert.com​moneysavingexpert.com. Over 25 years, the commission-loaded route would cost roughly £3,000 – £3,200, whereas the no-load route costs about £1,560​moneysavingexpert.com​moneysavingexpert.com – literally double the total cost to the consumer when commission is in the picture. The product (sum assured, term, insurer) is the same; the only difference is the distribution channel and commission. This stark case shows how a “hidden” ~£600 commission (paid upfront to the selling agent in the bank/direct scenario) ultimately comes out of the customer’s pocket via higher premiums​moneymarketing.co.uk. When that commission is waived, the premium effectively halves. Takeaway: Commission-loaded and no-load versions of protection can have massively different lifetime costs, with the consumer often unaware of the saving they miss by not using a fee-based intermediary.
• Over-50s Whole of Life Plan vs Alternative: Over-50s plans are heavily marketed on TV and by mail, often emphasizing “no medical exam” and free welcome gifts. These are commission-loaded products by design – typically sold direct or via affiliates for a commission, with relatively small payouts. The FCA has found that many guaranteed acceptance over-50s life insurance products offer poor value, in that “the total premiums paid over an average lifetime far exceed the payout – typically at least 50% greater”​healthcareandprotection.com. For example, an over-50 plan might promise a fixed £5,000 payout on death, for premiums of say £20/month. If the average policyholder pays in £30/month for 20 years, that’s £7,200 paid to get £5,000 back (and living longer only increases the disparity). Why the poor value? A large part is that these products have high expense and commission ratios – the insurer often pays substantial marketing costs, and in some cases commissions to partners (like charities or comparison sites that refer clients), meaning a smaller portion of the premium goes toward the insurance benefit. By contrast, a “no-load” alternative could be either: (a) buying an underwritten whole-of-life policy through a broker (if health permits) – which might give a much larger sum assured for the same premium because it’s priced more tightly with medical underwriting and often the broker can discount the commission; or (b) simply putting that £30/month into savings or an investment, which in 20 years would exceed the guaranteed payout. One real case: SunLife’s Guaranteed Over 50 Plan, a market leader, has been critiqued by consumer advocates because if a policyholder lives to their life expectancy, they will pay far more in than they get out – effectively funding high commissions and marketing overhead. In response to such issues, the FCA specifically flagged over-50s plans in its study scope as potentially “not consistent with providing fair value … impacting customers in vulnerable circumstances”​healthcareandprotection.com. Takeaway: Commission-heavy products like over-50s plans can be structurally poor value, and consumers should compare against no-commission or underwritten alternatives. If an adviser were involved (many over-50s are sold direct, but say a broker could advise an unhealthy client to take one), a good adviser would disclose the drawbacks and could even reduce their commission to improve value. Unfortunately, many consumers buy these from TV ads with no advice, unaware of the trade-offs.
• Commission Churn vs Staying Put: Consider a customer who took out a 25-year level term policy 5 years ago via a broker. The broker earned, say, 170% of annual premium in commission upfront. Now, 5 years later, the broker approaches the client suggesting they switch to a new policy with a different insurer for a “better deal” – perhaps a slightly lower monthly premium or an added feature. If the client switches, the broker will earn another large upfront commission from the new policy. However, the consumer may lose out: the slight premium reduction could be due to starting a new 25-year term at a younger age – but the client is actually older now, so a new 20-year policy might not truly save money over the remaining needed term. More critically, if the client’s health has changed (say they developed a condition in the interim), the new policy might exclude that condition or come with higher loading, or worst case the claim might not pay if nondisclosed. The FCA has observed brokers engaging in such “unnecessary switching” for commission​healthcareandprotection.com. A real-world example came to light where some advisory firms were routinely rewriting life cover every 24–36 months; clients ended up repeatedly restarting the contestability period of policies (the initial period when certain claims could be challenged) and sometimes lost grandfathered benefits. One case study in the press described an individual whose critical illness cover was replaced by a new policy that, unbeknownst to them, had a narrower definition of conditions – leaving them unable to claim years later, whereas the original policy would have paid out. The motivation for the switch, it turned out, was largely the adviser’s commission, not the client’s benefit. Takeaway: A commission-based adviser has a financial incentive to “churn” policies; a fee-based adviser (who might charge an hourly or annual retainer) has no such incentive and may advise keeping an existing policy if it’s still suitable. Consumers should be wary if an intermediary frequently suggests changing policies without a clear, tangible benefit – it could be a red flag of commission-driven advice.
• Insurer with Dual Pricing (Hypothetical): Suppose Insurer X launches a new direct-to-consumer term life product line with the promise “we don’t pay commission, so we pass the savings to you.” If genuine, this no-load product should be priced lower than Insurer X’s normal broker-sold product. For instance, Insurer X’s broker channel price for a given risk might be £40/month (which includes, say, £8 that goes to commission and associated costs). A true no-commission version might be, say, £32/month for the same cover. If such an offering exists, it provides a benchmark to see the quantitative impact of commission. In practice, few insurers openly publish a dual price, but one can find clues: some mutual or direct insurers have lower premiums but often with reduced adviser support. If Insurer X’s direct price is in fact the same £40/month (meaning they did not pass on any saving), then effectively the insurer is pocketing what would have been the £8 commission – a sign that the consumer isn’t better off cutting out the middleman unless they use a broker who rebates that £8. Takeaway: A “commission-free” product only benefits consumers if the price is commensurately lower. Regulatory pressure (and consumer awareness) is pushing for transparency here. The market study may prompt insurers to make no-commission options more visible, enabling case studies where Product A (with full commission) vs Product B (no commission) can be directly compared.

In conclusion, the evidence shows that commission structures materially affect the value consumers receive in pure protection markets. Standard commission deals – often 4 years’ premium upfront – can induce behaviors (like premium loading and policy churning) that are not in consumers’ best interests​

healthcareandprotection.com​

healthcareandprotection.com. Meanwhile, alternatives do exist (commission-free brokers, direct mutuals, etc.) that can save consumers substantial sums over a policy lifetime​

moneysavingexpert.com. The challenge – and the aim of the FCA’s current study – is to shine a light on these practices and ensure that advisers and insurers prioritize good consumer outcomes over commission maximization. As industry commentators have noted, it’s time to put the customer’s interest first and eliminate any “systemic gaslighting” that downplays the impact of commissions on cost and advice quality. The very fact that the FCA felt the need to intervene with a market study suggests that self-regulation has fallen short. We now have a unique opportunity, backed by data and regulatory will, to realign incentives in the protection market – whether through better disclosure, revamped commission models, or a shift toward fee-based advice – so that consumers get fair value and trust in these vital insurance products is maintained.

Sources:

• FCA Press Release (21 Mar 2025) – Pure Protection Market Study announcement​mondovisione.com​fca.org.uk
• FCA Portfolio Letter to Life Insurers (20 Sep 2023) – Matt Brewis’ warnings on commission and churn​healthcareandprotection.com​healthcareandprotection.com
• Health & Protection (Apr 2024) – “FCA investigation focusing on loaded commission, churn…”​healthcareandprotection.com​healthcareandprotection.com
• MoneySavingExpert – “Cheap Life Insurance” guide (Mar 2025)​moneysavingexpert.com​moneysavingexpert.com​moneysavingexpert.com
• The Right Mortgage Network – Protection Commission Panel (2019)​therightmortgage.co.uk​therightmortgage.co.uk
• Legal & General – Intermediary Terms of Commission (Illustrative commission structures)​cms.legalandgeneral.com
• Money Marketing (Kevin Carr, 2019) – Commission in protection averages (~£600 on a £30/month policy)​moneymarketing.co.uk
• Cura Insurance – “Fees and commission” blog (2022)​curainsurance.co.uk​curainsurance.co.uk (advisor perspective on premium equality and loaded commissions)
• FCA Market Study Scope – Examples of poor value (over-50s plans) and concerns​healthcareandprotection.com.