Life Assurance Premium Levy
A new 1% Government levy on life assurance payments was introduced as part of the 2009 Finance Act.
As a result, Irish Life must collect an additional 1% of payments to customer’s savings plans from 01 February 2010 and new investment plans from 01 March 2010.
This levy will be collected by Irish Life and passed directly to the Revenue Commissioners. If you pay your payments by direct debit your payment amount will automatically increase by 1%. As an Irish Life customer you do not need to take any further action, and the levy will not affect your entitlements under your plan.
1. What is the premium levy?
The Minister for Finance announced the introduction of a 1% levy on life assurance payments as part of his budget speech in April 2009. Under the Finance Act 2009, life assurance payments paid into both new and existing plans on or after 01 August 2009 are subject to a 1% levy.
2. What types of plans does the Government levy apply to?
The levy applies to all the main policy types:
- protection (including group risk)
- savings
- investments
Irish Life implemented the Government levy for protection plans on the 01 August 2009. Protection plans include life cover, mortgage protection plans and plans which pay an amount on disability or the diagnosis of a specified illness.
As outlined above this levy was also introduced on Savings plans from the 01 February and on new investment plans from 22 March 2010.
There is already a premium levy on general insurance plans, e.g. car and home insurance. This was increased from 2% to 3% in the 2009 Finance Act.
3. How is the levy calculated?
The Government levy will be calculated as 1% of the plan payment. It is important to note that the amount you pay going forward will now be made up of two parts: (i) the plan payment, and (ii) the Government levy.
For example, if your current monthly savings or protection payment is €200 then an additional €2 will be collected, as follows:
| Current monthly payment: | €200 |
|---|---|
| Government Levy: 1%: | €2 |
| Total amount to be paid: | €202 |
If you pay your savings payments by direct debit your payment amount will automatically increase by 1% from 01 February 2010. The levy has been active on protection plan payments since 01 August 2009.
If you open a new investment plan, or wanted to top-up an existing investment plan, the amount you will need to pay must include both the payment amount and the 1% levy. There are two choices here:
If you know the total you want to pay, including the levy:
Your total payment will be split into two parts, (i) the plan payment, and (ii) the levy.
| Total you want to pay: | €10,000 |
|---|---|
| Plan payment= €10,000 / 1.01: | €9,900.99 |
| Government Levy= €9,900.99 / 100: | €99.01 |
If you know the amount you want to go towards your investment plan, excluding the levy:
In this case, the levy will need to be added to your plan payment.
| Plan payment: | €10,000 |
|---|---|
| Government Levy: 1%: | €100 |
| Total amount to be paid: | €10,100 |
In all cases, only the 'Plan payment' will go towards the plan and it is this amount which will appear in all your plan documentation.
4. How will Irish Life protection customers be affected by the premium levy?
Irish Life has applied the 1% levy to all protection plans since 01 August 2009 and will now introduce the 1% levy to all savings plans from the 01 February 2010. The levy will also be applied on new investment payments and top-ups of existing investment plans from 01 March 2010.
If you pay your payments by direct debit this payment amount will automatically increase by 1%. If you need to know the new direct debit amount, please email customerservice@irishlife.ie, contact your Financial Adviser or call our customer service team on 01 704 1010 and we will be happy to assist you.
5. What actions should customers take?
There is no need for customers to take any action at this time.
The Government levy will automatically be added to savings payments paid after 01 February 2010. The levy will also be payable on new investment payments and existing investment plan top-ups from 01 March 2010.
The levy is collected by Irish Life and passed directly to the Revenue Commissioners.
Still have more questions?
If you have additional questions and wish to contact us please email customerservice@irishlife.ie or call our Customer Service Team on 01 704 1010.
