Sovereign reducing adviser commissions
The new life insurance legislation, which was introduced in draft form nearly two years ago, will significantly increase the tax paid by life insurers from July 1.
Current tax rules were set at a time when most life insurance policies included both risk and savings components. While the industry shifted to term life policies (with no savings component) in the late 1990's, the legislation remained the same, arguably leaving the new type of life policies under-taxed.
The tax changes are expected to reduce profits across the insurance industry as a whole by as much as $75 million per year.
Sovereign today confirmed its intent to limit the impact on policy holders and said adviser up front commissions for term life insurance YRT will be cut from 230% to 200% and accidental death and level term will be cut from 87.5% to 75%.
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