Government Levy

Current from: 17 February 2010

What is the Life Assurance Premium Levy?
The 2009 Finance Act introduced a new 1% Government Levy on life assurance premiums with effect from 1st August 2009. The levy applies to premiums paid into both new and existing policies on or after 1st August 2009.

What does the Government Levy apply to?
The 1% premium levy applies to the premiums paid to all life assurance companies from 1st August 2009, on both existing and new policies. The levy applies to most types of life assurance policy including

• Protection
• Savings
• Investments.

Pension policies (including PRSAs and AMRFs/ARFs) are exempt from the levy with effect from January 1st 2010..

Levy Questions & Answers

How is the levy calculated?
The government levy is calculated as 1% of the policy premium. Where the levy is implemented it will be charged in addition to the usual policy premium.

For example, if your premium is currently €100 per month for your protection or savings policy the levy will cost €1 per month (1% of €100). We will therefore have to collect €101 in total from you - €100 for the premium PLUS €1 for the levy.

I have a protection policy with Bank of Ireland Life – how does the levy affect me?
The levy is due on any premium paid from 1st August 2009.

The government levy is calculated as 1% of the policy premium. It is charged in addition to the usual policy premium.

For example, if your premium is currently €100 per month the levy costs €1 per month (1% of €100). We will therefore have to collect €101 in total from you - €100 for the premium PLUS €1 for the levy.

If you pay by direct debit we will collect the premium plus levy from your account.

If you pay by cash your bill includes the amount of any levy payable.

Bank of Ireland Life will pass the levy on to the Government.

Your policy benefits and entitlements will remain the same and will not be affected by the levy.

I have a savings policy with Bank of Ireland Life – how does the levy affect me?

The levy is due on any premium paid from 1st August 2009.

We will start to collect the levy in March 2010.

If you pay by direct debit we will collect the premium plus levy from your bank account. As a result you will see your regular direct debit payment increase by 1%. We will start to collect the levy during March 2010. Your next direct debit after we start to collect the levy will include any outstanding levy due since 1st August 2009 as well as the levy due on the premium being collected on that date.

For example, if your premium is currently €100 per month, payable on the 20th of the month, the levy will cost €1 per month (1% of €100). On March 20th we will collect €108 in total from you, broken down as follows:

Premium: €100
Levy: €1 (1% of €100)
Levy Arrears: €7 (1% of €100 for 7 months, August 2009 to February 2010 inclusive)
Total: €108

Thereafter we will collect €101 per month from you, €100 premium plus €1 levy.

If you pay by cash your bill will include the amount of any levy payable.

Bank of Ireland Life will pass the levy on to the Government.

Your policy benefits and entitlements will remain the same and will not be affected by the levy.

Why are you only starting to collect the levy on savings policies now?

Since the announcement of the levy by the Government last April the insurance industry has been engaged in discussions with the Department of Finance regarding alternatives to the levy. While these discussions were ongoing we deferred collecting the levy on savings business.

However, following the publication of the 2010 Finance Bill on 4 February 2010, it is now apparent that no changes will be made to the levy for life assurance savings business and so we must start collecting it.

I have a pension product with Bank of Ireland Life – am I impacted?
No.

Following the publication of the 2010 Finance Bill on 4 February 2010, the levy has been removed from pensions business with effect from January 1st 2010.

Bank of Ireland Life have absorbed the cost of the levy due on pensions premiums received in 2009.