london international insurance

london international insurance
The life insurance industry has been growing at a steady pace over the last few years. A low 2.6% contribution to the GDP figure in 2006 it rose to 3.26% and 4.09% in 2006 and 2007, respectively. The biggest propeller of this growth has been the unit-linked insurance plans (Ulips) which have, according to some estimates, accounted for nearly 90% of the new business being generated by life insurers.

The finance Bill 2008-09 has the management of Ulips of life insurance companies under the service tax net. The mortality portion of the premium has already been taxed. The direct impact of these, however minimal, would be the financing of insurance policyholders.

The charge is made to the services provided by the insurer to the policyholder. The amount for the levy of sales tax arises from the difference between the amount of investable and separately for the actual investment (including mortality). For example, at a premium of RS100, if the mortality charged is Rs10 and Rs85 investable amount, then the sales tax to raise Rs5, which is 100 - 95 (10 +85).

In simple words, the service in the amount of 12,36% on Ulips is for the entire amount that the insurer keeps after deduction of fees and the amount of investable mortality. Much of this is reflected in the front-end premium allocation charge. So, the higher the cost, the greater the effect. Nitin Chopra, CEO of Bharti AXA Life Insurance Co., Ltd, says: "Due to the placement of the allocation of Ulips under the service tax fold, while the entry load of other market-led instruments are not, not a Ulips level playing field. "

In mutual funds, the service is levied only on the asset management fee. This fee is only part of the recurring fees that the fund house can charge based on the size of the corpus. Normally it is 2.25% of the corpus. The asset management charge is part of this and capped at 1%.

Anil Sahgal, Head of Strategy and Chief Investment Officer, Aviva Life Insurance, says: "The intention of the Budget Committee was speaking to justice between the Fund and Ulips which perhaps is not the case according to the figure in the financial - Bill."

Also, the industry feels the tax will hurt insurance penetration in India. Chopra says: "Indian customers prefer investment-cum-insurance. Ulips, as a category, the promotion of value-added benefit of market-led investment. Ulips must therefore be supported on the front to improve insurance penetration of the tax in India. "

The sales tax will lower the returns for a Ulip owners. Says V. Srinivasan, Chief Financial Officer, Bharti AXA Life: "Our analysis indicates that the internal rate of return (IRR) for the customers to our products by 20-40 basis points per year over a 15-year holding period, under this Service tax. "" That would also be true for most other insurance companies too. Shikha Sharma, CEO and Managing Director, ICICI Prudential Life Insurance, says: "The service tax, perhaps the network of input service tax credit for life insurance, will probably to the consumer. As such, there will be no change in the cost ratio of life insurance. "

As various components of the premium of a Ulip are under the service tax net, the tax incidence for the customers has increased.

Find the plans that have a low fee in advance, the premium division. But that does not mean that the yield would be higher as insurers might in a higher political administration and the management of funds.

Sofia is an author of several articles Pertaining to Life Insurance She is known for her expertise on the subject and on other Business and Finance related articles.