icici prudential life insurance mutual fund
The life insurance industry has been growing steadily in recent years. A low 2.6% contribution to the GDP figure in 2006 was to 3.26% and 4.09% in 2006 and 2007, respectively. The biggest proponent of this growth has been the unit-linked insurance plans (Ulips), which according to some estimates, represents almost 90% of the new company to be generated by life insurers.
Funding Bill 2008-09 has brought the management of Ulips life insurance companies in the service tax net. That portion of the mortality of the premium is already being taxed. The direct impact of this, however minimal, would in the value of policyholder funds.
The indictments are in the service provided by the insurer to the policyholder. The amount charged for the fee rate service is the difference between the premium paid and the amount invested segregated for actual investment (including mortality). For example, a premium of Rs100, if the load mortality is 10 rupees and the amount invested is RS85, then the service rate is a result of the RS5, which is 100 – 95 (10 +85).
In simple words, the rate service of 12.36% in Ulips will be charged on the total amount the insurer keeps after deduction of mortality charges and the amount you can invest. Much of this is reflected in the front-end premium allocation charge. Therefore, the higher the load, the greater the impact. Nitin Chopra, CEO, Bharti Axa Life Insurance Co. Ltd, said: "By placing the burden Ulips allocation from tax service times, while the burden of market entry of other instruments not carried, Ulips not provided a level playing field. "
In mutual funds, service tax is charged only on the charge of management Asset Management is part of this and a ceiling of 1%.
Anil Sahgal, director of strategy and chief investment officer, Aviva Life Insurance, said: "The intention of the Budget speech was to bring equity between mutual funds and Ulips which perhaps is not the case according to the illustration in the Finance Bill. "
Further, the industry feels the tax will affect the insurance penetration in India. Chopra says: "Indian customers prefer investment-plans insurance. Ulips, as a category, promote value addition, Holder Ulip. , Says V. Srinivasan, CFO, Bharti Axa Life: "Our analysis indicates Service of this tax. "This is true for most insurance companies also. Shikha Sharma, CEO and managing director, ICICI Prudential Life Insurance, says: "The service rate, perhaps the net tax credit of input service life insurance company is likely to be transmitted consumers. As such, there will be no change in the expense ratio of life insurance company. "
As the various components of Ulip premiums are a network of service tax, the general incidence of taxation for customers has increased.
Look for plans that have a low charge initial award of prizes. But that does not mean that overall returns would be higher that insurers could use the senior management and policy fund management expenses.
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Article Source: ArticlesBase.com – Ulips Help Life Insurance Industry Grow
