7.3 Charging and Commission Structure
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Charges for unit linked policies are usually highly visible and,
given the competitive market, very similar between providers, along
the lines of:
- 5% initial charge (bid-offer).
- 1% - 2% annual management charge.
- Monthly flat rate policy fee.
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Charges for with profit or deposit accounts tend to be hidden and
difficult to compare.
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Administration charges for the larger occupational schemes tend
to be less per capita than for individual schemes, whether PPP or
EPP. It is usual for the charges under group occupational schemes
to be borne by the employer. Similarly, it is conventional for life
cover, group IPI and other related employee benefits to be borne
by the employer.
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With the advent of commission disclosure most insurance companies
offer a menu of commission so that the adviser can chose how much
commission to take and possibly how much to rebate into a clients
contract. The advent of stakeholder pensions is giving this a higher
profile.
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Stakeholder pension charges are restricted to a 1% annual charge
with no bid/offer spread or transfer penalty
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