FAQ's: JFL Financial Advisors

Frequently Asked Questions

1% Life Assurance Premium Levy – Frequently Asked Questions

Q: WHAT IS THE NEW LIFE ASSURANCE PREMIUM LEVY?

A:
The Minister for Finance announced the introduction of a 1% levy on life assurance premiums as part of his budget speed in April. Under the Finance Act 2009, life assurance premiums including pensions, investments and savings premiums paid into both new and existing policies on or after 1st August 2009 will be subject to the levy.

Despite lobbying by the life assurance industry, the levy has been passed into law and will be effective on all premiums received on or after 1st August 2009. Any premiums received on or before 31st July 2009 will not be subject to the levy.

Q: HOW LONG WILL THE LEVY APPLY?

A:
The Irish Insurance Federation is currently in discussions with the Department of Finance about the potential to put an alternative arrangement to the levy in place. However, at this point there is not indication to the life span of the levy, so it must be applied to premiums invested from 1st August 2009 until the legislation changes, if it is agreed to change.

Q: HOW WILL THE INSURERS APPLY THE 1% LEVY TO CUSTOMERS?

A:
Life Companies will apply the 1% levy to all protection policies from 1st August 2009. This means they will collect an additional 1% from protection policies with effect from 1st August on the following policy types;

• Life cover policies
• Mortgage protection policies;
• Policies which pay an amount on disability or the diagnosis of a specified illness.

Q: DO I HAVE TO DO ANYTHING ABOUT THIS NEW LEVY?

A:
No, there is no need for customers to take any action at this time. The levy will be automatically added to protection premiums paid after 1st August 2009.

Q: WHY ARE LIFE COMPANIES COLLECTING THE 1% LEVY IN ARREARS?

A:
Life offices are not in a position to collect the 1% levy starting in August and as a result, will collect the outstanding levy from your premiums in arrears. The reason for this is because time is required to programmed and document the 1% levy changes into the various life companies systems.

Q: HOW DOES THE LEVY AFFECT MY PROTECTION POLICY?

A:
The levy will be calculated as 1% of your protection policy premium. It is important to note that the amount you pay from 1st August 2009 will now be made up of two parts: (1) the policy premium, and (ii) the levy.

If you are currently paying, for example, €100 then an additional €1 will be collected as follows:

Example:

• Current Premium – €100
• Levy = €100/100 = €1
• Total amount to be paid = €101

Q: DOES THIS AFFECT ALL MY INSURANCE POLICIES?

A:
Yes, The 1 % levy affects all Life Assurance companies in Ireland.

Q: WHY ARE YOU DIFFERENT FROM THE ADVISER AT MY BANK?

A:
John F Loughrey & Associates are independent advisers based in Letterkenny Co. Donegal. This means that we are not tied to one particular institution, as an adviser at your bank could be. We can offer advice on products available from all the financial institutions, thereby ensuring your requirements are met by the most suitable product.

Q: WHICH COMPANIES DO YOU DEAL WITH?
A:

• Anglo Irish Bank
• PTSB Deposits
• Caledonian Life
• Canada Life
• Eagle Star
• Friends first
• Hibernian Life
• Irish Life
• New Ireland
• Standard Life
• Bloxhams
• BCP Asset Management
• Other Specialist Investment Managers
  

Q: I ALREADY HAVE EXISTING POLICIES – CAN YOU ADVISE ME ON THEM?

A:
We are happy to provide a review of existing policies to ensure that they are meeting your requirements and can advise you of any adjustments which you may need to make. We have a team of Qualified Financial Advisors to advise you.

Q: IF I INVEST MONEY, WHAT RETURN WILL I GET?

A:
The return on any investment is dependent on how the investment fund performs. Our independent fully Qualified Financial Advisors will help you to decide on the most appropriate fund for you, taking into account your attitude to risk. A higher risk fund offers the potential for greater returns but also has the potential for greater losses, whereas for a low risk fund the opposite is true. Past performance of an investment fund is no guarantee of future returns.

Q: ANY OTHER QUESTIONS?
A:
We will be happy to help if you have any other queries. Please feel free to contact us and one of our Qualified Financial Advisors will contact you.