Life insurance commission

A senior manager of a large life insurance company in Indonesia told me that the commission rate payable on an endowment policy is 20% of the premium during the first year and 5% during the second year. The total is 25%. For whole life, it can go up to a total of 40%.

The commisison rate for regular premium unit linked business in Indoesia is higher, at about 45% in total.

I told him that the commission rate payable in Singapore for a similar product is about three times. He was surprised. He asked, "How can the product give good value to the customer?"

I have found that many countries have reduced their commission rates on life insurance products. The commisison rates in Singapore are far too high. I hope that the Singpaore market can keep up to the trends in other countries.

Note: Most of the products sold by NTUC Income have commission rates that are much lower than the market. I hope that they will be the benchmark for the other companies to follow.