Some major changes are going to happen in life insurance industry from October 1, 2013, especially in traditional policies such as Endowment Plans, money-back plans and even ULIP’s.
You will surely have a Life Insurance Corporation (LIC) policy or / any other private sector traditional plans or / might buy them in coming times.
Till now LIC was not charging the service tax of 3 % from the customers & paying it to govt from the pool of money collected itself, but now the service tax will have to be charged separately from policy holders.
Which means that if your LIC premium was Rs. 50,000 per annum, now it will be 3.09 % higher in first year, which is Rs. 51,500 and after 1st year, it will be 1.545%.
While customers see it as additional burden, note that its not the case exactly, Earlier - LIC was paying the service tax from the pool of money collected from investors only, which reduced the bonus amount given back to them.
But, now because it will not be taken out from the funds, that means the bonus declared each year will go up by that much margin & will come back to investors only. Note that Pvt companies were charging the service tax already, so nothing changes on their side. Only LIC was not charging it separately, which they will have to do from Oct 1 deadline.
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