Written by · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-10-20

Life Insurance Commission in NZ: How Advisers Get Paid

Most New Zealand insurance advisers are paid commission by the insurer when you take out a policy, as a percentage of your premium, rather than a fee from you. The Financial Markets Authority says upfront commission can be as high as 200% of the annual premium, and ongoing commission could range from 5% to 25%. Advisers must tell you how much commission they will be paid.

In short

Insurance adviser commission is the payment an insurer makes to an adviser or adviser business when a policy is placed and while it stays in force. It is usually calculated as a percentage of the premium. There are two parts: upfront commission, paid when the policy starts, and servicing (trail) commission, paid in later years. The insurer builds the cost into its premiums, so you pay for it through the premium rather than with a separate invoice. That structure explains both why advice can feel free and why it deserves questions: a commission is only paid if a policy is placed.

A person holds up a large pie chart with one slice lifted clear of the rest in their other hand

How commission works, with a round-number example

The FMA describes the structure this way: most advisers receive commission; the upfront amount is higher and the servicing amount lower; and the servicing percentage depends on how much upfront commission is charged (FMA: Insurance advice). The FMA's figures date from its 2016 review and the page gives no more recent data, so treat them as the regulator's description of the structure, not a rate card.

A worked example with invented round numbers, to show how the percentages work (it is not a real policy):

Item Illustration
Yearly cost of the policy (made-up figure) $1,000
Upfront commission at 100% of that first-year cost $1,000
Upfront commission at 200% of that first-year cost (the FMA's "as high as") $2,000
Servicing commission at 10% a year (inside the FMA's 5 to 25% range) $100 a year

The numbers show scale: the adviser's first-year payment can be one to two times what you pay the insurer that year. The FMA does not give a lower bound for the upfront percentage, so we do not either. The same page notes that some insurers have a clawback period, usually two years: if you cancel inside it, the adviser "must repay a portion of the upfront commission", and "some advisers may pass this charge on to their customer". It also lists "soft" commissions such as sports tickets and small gifts. Ask whether any clawback applies and who bears it.

Does an adviser cost you more than going direct?

The sources we can name do not compare the price of the same cover bought through an adviser and direct, so we cannot give a number. What the FMA says is that commission is built into the premium. Three points follow:

Some distributors publish their commission. New Zealand Seniors is a trading name of Greenstone Financial Services NZ Limited, a licensed financial advice provider that distributes insurance issued by Pinnacle Life. Its disclosure statement (prepared 25 March 2024) says Pinnacle Life pays Greenstone Financial Services, which trades as New Zealand Seniors, a commission of up to 62% of each premium "on a level basis throughout the life of the policy" (NZ Seniors: Disclosure). OneChoice's disclosure (prepared 3 June 2024) gives up to 76.63% (OneChoice: Disclosure). Those disclosures cover funeral insurance and life products sold under the NZ Seniors and OneChoice brands, paid as a level share of each premium, which is a different structure from the upfront-plus-servicing model the FMA describes. We cite them to show that commission can be large, is sometimes level for the life of a policy, and is published when you look for it. No insurer's actual commission schedule or clawback terms for adviser sales are on file for this page, so we do not print any.

What advisers must disclose, and what rules apply

Anyone giving regulated financial advice to retail clients must hold, or work under, a Financial Advice Provider (FAP) licence from the FMA. The FMA says advice providers must make sure the client understands the nature, scope and limits of the advice, put the client's interests first when there is a conflict, and use care, diligence and skill (FMA: Financial advice providers). The Code of Professional Conduct for Financial Advice Services requires treating clients fairly, acting with integrity (including managing conflicts), giving suitable advice and making sure the client understands it (Financial Advice Code).

On insurance specifically, the FMA says advisers "must disclose to you how much commission they will be paid" for a recommendation (FMA: Insurance advice). The FMA also says that being on the Financial Service Providers Register does not mean someone is licensed or regulated by the FMA, so check for a licence (FMA: Disputes and consumer protection). We have not found a source for a statute section number that sets the disclosure wording, so we cite the FMA and the Code rather than a section.

Where the conflicts arise

Commission does not make advice wrong, but it creates three pressures worth naming:

  1. Premium size. A percentage of a larger premium is a larger payment.
  2. Which insurer. If two products suit you equally, the one that pays more has a pull.
  3. Replacing a policy. A replacement can generate fresh upfront commission, and clawback exists partly because of cancellations. Our guide to changing or cancelling life insurance safely sets out the order of steps. The FMA says to keep the old policy running until the new one is in force and to watch for new qualifying periods and exclusions (FMA: Insurance).

The regime does not ban commission. It requires disclosure, a duty to prioritise your interests, and a way to complain.

How QuoteHub is paid

QuoteHub is a Momentum Life partner. Smiths Insurance & KiwiSaver may receive a commission if you buy through our link. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). Our disclosure and how we are paid pages set out the arrangement.

Momentum Life Limited is a licensed life insurer and holds an A.M. Best financial strength rating of B (Fair), a range Momentum's own scale calls "Vulnerable" (Momentum Life: Financial strength). Its two products that the buttons on this page lead to are not the same:

Six questions to ask an adviser

  1. How are you paid for this advice, and how much will you receive if I take this policy?
  2. Do you receive different amounts from different insurers?
  3. Is there a clawback if I cancel, and would it come back to me?
  4. Which insurers did you compare, and why this one?
  5. What happens at claim time, and who helps?
  6. Are you licensed? You can check the Financial Service Providers Register and the FMA's licensing information.

If you are unhappy

Every business offering retail financial services must belong to an approved dispute resolution scheme. There are four: the Banking Ombudsman Scheme, the Insurance & Financial Services Ombudsman Scheme (IFSO), Financial Services Complaints (FSCL) and the Financial Dispute Resolution Service. You complain to the provider first, then to its scheme, which is free and independent. The FMA takes complaints about wider issues but "can't obtain remedies for individuals" (FMA: Disputes and consumer protection).

Frequently asked questions

Do I have to pay an insurance adviser in NZ?

Usually not directly. Most advisers are paid commission by the insurer, built into the premium. Some also charge a fee for complex needs, and they must tell you how much commission they will be paid.

How much commission do advisers earn?

The FMA says upfront commission can be as high as 200% of the annual premium including bonus commissions, and ongoing commission could range from 5% to 25%, based on its 2016 review. Actual rates depend on the insurer and the adviser's agreement.

What is clawback?

A period, usually two years at insurers that have one, in which an adviser must repay part of the upfront commission if you cancel. Some advisers pass it on.

Can I find out what my adviser earns on my policy?

Yes. Ask, and read the disclosure you are given. The FMA says the adviser must disclose how much commission they will be paid.

How do I check an adviser?

Check for an FAP licence with the FMA, not only the Financial Service Providers Register, which includes businesses that are not licensed.

For a second opinion on an existing policy, see our guide to reviewing your insurance, or start a free review. This page is general information, not personal advice.

References

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