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Regulatory requirements for selling protection

This article is part of
Guide to Income Protection

Protection was not included directly under the Retail Distribution Review, meaning there is no hard and fast ban on taking remuneration in for the form of commission as there is on pension and investment products.

In practice this means protection can be sold under both of the regulatory rulebooks: the general Conduct of Business Sourcebook, and the insurance-specific Insurance: Conduct of Business Sourcebook.

If sold under COBS, then the advice must be paid for by the customer paying the adviser a fee at a level they must agree with the adviser.

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If sold under ICOBS, then the adviser will receive a payment - commission - directly from the insurance provider that is funded as part of the insurance policy premium.

Alternatively, protection products can be purchased over the internet. While the focus of many websites is cost, care should be exercised that the features provided by the different policies are directly comparable. For minimal additional cost, policies that appear more expensive can include valuable and worthwhile features that cheaper cover omits.