Friday, March 28, 2008

Term Life Insurance - Buy Term and Invest the Difference!

The phrase “BUY TERM AND INVEST THE DIFFERENCE” evolves around the conception of term life policy which is a basic protection policy and the endowment/ whole life policy which have protection and investment/saving features. To set it simply, the phrase intends that instead of taking up the endowment/whole life policy, an individual should purchase a term policy for protection and the difference between the insurance premiums of the two policies is to be invested by the individual himself to earn some dividend on the investment.

To hold with the phrase "Buy Term and Invest the Difference", one need to have got the strong belief and will-power to put the difference in the insurance premium in an investing vehicle that tin wage a tax return higher than that declared by an insurance company. Unfortunately, most of us make not have got the capableness to accomplish the desired tax return over time. At times, one is lucky to harvest a good tax return from the equity market but this is all short-lived when the downswing occurs, all additions will be wiped out and may even heavy losses.

However, investment-linked life insurance have got got been pioneered and offered for sale by insurance companies around the human race as one manner where it is possible to have both protection and investing at the same time. In the United States of America, investment-linked life insurance is known as "variable life insurance". It was pioneered by the Equitable Life Assurance Society and was offered for sale in 1976. This type of merchandise is recommended if one holds with the phrase "Buy Term and Invest the Difference".

Investment-linked life insurance policies offer more flexibleness to the policy proprietors and they can take when to exceed up or how much, or on what part of their policy that is linked directly to investing performance. Considering the broad range of investing tools available, investment-linked insurance merchandises may be linked to pillory and shares, property or existent estate, cash deposits, fixed income securities, authorities bonds, corporate bonds, unit of measurement trusts, investing trusts, other life insurance and annuities. Investment-linked finances have got been created to lawsuit the client's assorted investing objectives, risk-reward profiles and investing preferences.

With respective insurance companies offering a assortment of investment-linked insurance products, it is now possible for an insurance policy holder to enjoy protection and at the same clip to put solely in one monetary monetary fund or a combination of funds, subject to certain limitations, such as as a minimum of 20% of his investing in each fund selected. An insurance policy holder may switch over his investing between finances when his investing aims change.

As an example, an Income Fund which is managed by a company's in-house fixed-income investment squad comprising people with more than than 20 old age of experience in the financial sector. This monetary fund is suitable for policy proprietors seeking stableness of principal and a higher tax return compared to bank sedimentations but with acceptable hazard to capital invested. The monetary fund is principally invested in fixed-income securities, exchequer products, money market instruments, corporate investing schemes, and any other permissible instruments or investings prescribed by the relevant regulating organic structures to supply a steady tax return to policy proprietors through accretion of capital over the long-term.

Without the being of investment-linked products, one may differ with the phrase and may not "buy term and put the difference" but instead to take up a traditional participating life insurance merchandise that supplies life protection with an component for investment. The insurance premium may be higher but it leads to wealthiness creative activity for the future.

Monday, March 24, 2008

Life Insurance: Who Needs It And How Much Do You Need?

Your friendly, neighborhood life insurance agent is most likely to answer this question with the word “everybody.”

The fact is, not everybody does need life insurance. If you don't have a family, you probably don't need life insurance unless, of course, you’re a really nice person and just want to leave some money to a friend or a charity.

If you do have a family, the question isn't do you need life insurance. The question is how much do you need?

A life insurance sales representative may want you to apply some kind of formula. In years gone by, he or she might have told you that you need to buy insurance equal to four times your annual salary. So, if your annual salary is $50,000, you might have been told you need at least a $200,000 policy. Today, the same agent might tell you that you need eight times your annual salary or a $400,000 policy.

In most cases, this is probably too simplistic an approach, as it tends to assume that you are your family's sole provider.

Today, there are a number of other factors that should be taken into consideration. Does your spouse work or is he/she a stay-at-home mom or dad? Are you a single mother or father? And where does that put you? How old are your children? Will your surviving spouse be raising kids for three years or 15? If your spouse works, how much does he or she earn? If something should happen to you, is there family nearby that could help raise your kids or is the nearest family 1,000 miles away?

Let's take a hypothetical example. Jim W. is 45 years old, earns $75,000 a year and has two kids age 15 and 17. Jim's wife, Martha is 43 and earns $50,000 a year. Jim and Martha believe their kids are college material. How much life insurance does Jim need? Let's assume $25,000 a year times the two boys, times four years. That's $200,000. Jim also wants to make sure Martha lives comfortably for the rest of her working life and figures she'll need an additional $25,000 a year to do this. Multiply this $25,000 by 22 and that's $550,000. Add this to the cost of the boys' college, and Jim needs at least a $750,000 life insurance policy ... and that doesn't include anything for Martha’s retirement!

Now, compare this to Beth who is the single mother of a boy, Robbie, age eight and a girl, Kinsey, age 12. How much insurance does Beth need? There's no spouse but if anything happens to her, the kids will go to her sister, and the sister will need financial help. So, assume $10,000 a year to the sister for 16 years -- $160,000 – plus college for the kids at $200,000. This adds up to a policy of maybe $360,000. See the difference that circumstances can make?

Before you purchase a policy, sit down and figure out who will need to be taken care of, for how long they will need the help and, realistically, what that help should consist of. If you die this should not be like winning the lottery for your survivors. Don't buy so much insurance that you will be really strapped for all those years before you pass on.

The next step is to do some comparison-shopping. Different insurance companies often quote different rates on just about the same coverage as they tend to rate risks differently. You should also look at the cost of term vs. cash value life insurance. Many experts believe that if you’re young, with young kids, your best bet is a term policy as it costs less, yet can offer good coverage. For example, if you're 35 and in good health, you can probably buy a $500,000, 10-year level term polity for less than $300 a year. And a 20-year, level-term policy might cost you no more than $400 a year.

You might also save money on the term insurance by buying more than one policy. For example, if you have two children, one age 12 and one age eight, you might consider buying a 10-year, level term policy to take the 12-year old through college, and a 20-year term policy to cover the eight year old through college.

Finally, you can get quotes on term insurance and even buy it without ever seeing a life insurance agent. There are a number of web sites where you can do this, including quickquotes.com, reliaQuote.com and intelliquote.com.

It is important to understand that the quotes available from these sites are just preliminary quotes. The insurance company you choose will not provide a firm quote until you have provided all requested information and, in most case, have taken a physical. The good news is that the physical will be done in your home and at your convenience.

Cash value life insurance is a much more complex issue. The best way to get information on it is to sit down with a good, experienced agent who can explain the alternatives available and the costs and benefits of each.

Saturday, March 22, 2008

Get Serious About Selling to Seniors- Sell More Life and LTCi!

There are so many financial planning strategies that make sense when using reverse mortgages. Some times adult children of aging parents need just as much or more education than the seniors themselves. After all, this is a relatively new concept, and often seems to good to be true. The important thing to remember is that reverse mortgages (also called Home Equity Conversion Mortgages) are backed by the federal government, and protections have been put in place for seniors and their families.

Heirs need to understand that with proper estate planning, they stand to inherit more than the value of their parent’s home. A reverse mortgage is one way to make that happen.

The National Council on Aging supports and advocates the use of reverse mortgages for long-term care planning and for managing the crisis of long-term care. Obviously, there are times when a client will not qualify for long-term care insurance, but fortunately, if they are a homeowner, there are still ways that we can help them. That’s why it’s so important for you to know the basics about reverse mortgages. Anyone who serves the senior market should have access to this important financial planning tool. For the NCOA statement and press release go to www.ncoa.org and search for “reverse mortgages”. AARP is also a supporter of this federally backed program for seniors. www.aarp.com

Let's look at an example case scenario, with a client who wants to purchase long-term care insurance and life insurance.

Jane Smith lives in St. Louis, Missouri.

• 65 years old

• Owns a home worth $200,000

• Standard health rating

• 5 year plan

• Compound inflation protection

• 90 elimination period

• $150/day coverage- comprehensive

• Annual premium total for both to have coverage: $4548

Jane is eligible to receive a lump sum of $99,657.03, from the equity in her home. Jane will purchase a life insurance policy by paying a one time premium of $50,000.

• Jane leaves the remaining $49,657.03 in a line of credit that grows at 6.35% per year.

• She pays her annual LTCi premium from the line of credit every year.

This means that Jane will leave her heirs a death benefit of $222,736, plus the value of her home minus her loan balance. She will be protected from the catastrophic cost of long-term care, and will be able to stay in her home to receive that care.

You have now helped her heirs to receive a tax free inheritance that is worth more than the current value of her home.

Jane did all of this without touching a penny of her savings, investments, or current income. In fact, you handed her and her heirs the cash flow they needed to keep her safe for her remaining years.

Get educated.

If you want to sell more LTCi, my suggestion is to have access to all of the tools you need to make that possible. Team up with someone in your community who can write reverse mortgages, or learn how you can write them yourself! Below is a review of common myths and misconceptions about reverse mortgages in case you missed this column last month.

Common client myths and misconceptions about reverse mortgages

(a.k.a. Home Equity Conversion Mortgages):

The Lender will own my home.
FALSE!

You, your family or estate continue to retain ownership of your home. The Lender does not take control of the title. The lender’s interest is only to the extent of the outstanding loan balance. As with a traditional mortgage they never have ownership in the property.

The Lender cannot wait for me to “get out of my house” so the lender can be repaid.
FALSE!

The HUD approved Lender(s) are not in the business of selling homes. However, with the support of HUD they are in the business of helping seniors keep their homes and being able to use some of their equity to meet whatever financial needs they may have – without causing further financial difficulties by requiring a mortgage payment.

My heirs will be responsible for repayment of the loan.
FALSE!

The Home Equity Conversion Mortgage is a Non-Recourse Loan, this means that the lender can only recover repayment of the loan from the proceeds of the sale of the property. If the property decreased in value and the loan amount was greater, the lender is paid the difference from the HUD Mortgage Insurance. Your heirs will not be responsible for the repayment of the loan

Home Equity Conversion Mortgages are very safe.
TRUE!

FHA and FannieMae guarantee the payments that are made to you (not applicable to CASH Account option).You continue to own your home and are guaranteed that you can stay in your home as long as you like, AND…You (the Borrower) are guaranteed that you can never owe more than your house is worth. All of the above guarantees are further backed by the HUD Mortgage Insurance on HECM’s.

Thursday, March 20, 2008

Best Home Owner Insurance -- Get It For A Lot Less With These Tips

Best place proprietor coverage for a batch less: This article will demo you other things you can make to acquire less rates. Also take short letter of the safeguard you are advised to take as you implement these tips...

1. Don't see your house along with the land it is standing on as this volition cost you more than but quite unnecessary. Some folks pay much more than than they should on place coverage on business relationship of this mistake. They just see their house for its complete value without deducting the cost of the land.

If you did this quickly name your agent and re-evaluate your place coverage policy. Subtract the land's terms and you'll recognize that you will necessitate far less coverage.

Your insurance premium will be more than low-cost and you'll still have got adequate insurance if you make this right. Bear it in head that insuring the land your house is standing on is existent waste material of money because it makes you no good whatsoever.

2. Enterprise to put fire fire extinguishers at of import points in your home. Your kitchen is one important point to have got one or more than functional fire extinguishers. You must as well guarantee that it's adequate for your sort and size of kitchen.

And, don't bury that you must maintain them within easy reach. Doing this volition aid you less your rates.

3. A typical vehicle garage have highly burnable liquids. To be on a safer side, do certain your garage is at a safe distance from your residential construction and you'll likely bask a better rate. You can acquire inside information of the suggested distance and how much you will acquire as price reduction for this from your agent.

4. Installing a sprinkler will do you eligible for considerable discounts. Sprinklers are very utile in putting off fires and, by extension, cut down fire damage. Even though they're by no agency cheap, they'll convey you singular discounts. You can pay back over respective old age thus reducing the trouble in disbursement the amount involved in such as a project.

5. Bashes your house have got fire escapes? If you state "yes" then do certain your agent cognizes about it as it should acquire you a little discount. Don't bury to state your agent even if all your place have as fire flights are rope ladders. Folks who don't have got these volition pull cheaper rates if they set in topographic point the right sort and figure for their home. Ask your agent to see what measure ups you for such as a discount.

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Tuesday, March 18, 2008

Guarding Against Financial Uncertainty

Protection & Security products form the foundation of a sound financial plan. These products should protect you from common risks we all need to think about and plan for:

• Losing your job
• Becoming sick or disabled
• Living too long
• Dying too soon

In its simplest form, the base of the financial planning pyramid consists of emergency savings and insurance. Here are some things to consider as you build the foundation of your financial plan:

Emergency Savings - Most financial professionals will tell you that it's a good idea to always have enough money on hand to pay your everyday living expenses for a period of three to six months.

This money could tide you over if you lose your job, or if you get sick or injured and need to cover expenses before your disability insurance kicks in. Consider your personal and family situation, job security, and other factors in determining how much to set aside.

Ideally, your emergency savings should be in vehicles like savings, checking and money market accounts where you'll have access to your money penalty-free.

Insurance - Insurance forms the underpinning of your financial plan. If your home gets seriously damaged, where would you find the tens of thousands of dollars it might cost to pay for the repairs? How would your family make ends meet if you became too sick or injured to work for an extended period of time? And what if the worst happened and you died? Would the money be there to keep the family home, pay everyday living expenses, and fund college and retirement savings plans for your survivors?

Insurance provides a financial safety net to make sure your family's financial situation won't fall apart if the unexpected strikes. Here are some of the main kinds of insurance you may want to consider as part of the foundation of your financial plan:

Life insurance - Life insurance helps protect your family and loved ones against financial difficulties in the event of your premature death. If someone you know depends on you financially, chances are you need life insurance. How much and what kind you need can best be determined by having an insurance professional help you conduct a thorough insurance needs analysis.

Many employers provide their employees with life insurance coverage, but it's often not enough to ensure the financial security of your loved ones. And if you leave your job or change jobs, you usually can't take the coverage with you.

For more information about life insurance, see the Life and Health Insurance Foundation for Education (LIFE).

Disability insurance - Disability insurance replaces lost income in the event that you become ill or disabled and can't work. Short-term policies typically provide coverage from 13 weeks to one year, while long-term policies may provide benefits up to age 65 or even for life.

Keep in mind that some policies pay benefits if you are unable to perform the duties of your customary job, while others pay only if you are unable to engage in any gainful employment at all.

Again, many employers provide some form of disability coverage, but it may not be sufficient to help your family make ends meet in the event of disabling illness or accident. That's why you should at least consider whether an individually purchased policy might be right for you.

For more information about disability insurance, see the Life and Health Insurance Foundation for Education (LIFE).

Health insurance - Helps pay for the ever-increasing costs of medical care. Choosing the type of health insurance coverage that's right for you requires careful consideration of the tradeoffs between flexibility and affordability.

At one end are Health Maintenance Organizations (HMOs), which are generally the most affordable option but usually require members to obtain care only from within a given plan's network of providers.

At the other end are indemnity plans, which allow for virtually unlimited choice of providers but are often the priciest option.

In between are Point-of-Service plans, which operate like HMOs but members can pay extra to see out-of-network providers, and Preferred Provider Organizations (PPOs), which function like indemnity plans but provide more favorable reimbursement rates when care is sought in-network.

For more information about health insurance, see the Life and Health Insurance Foundation for Education (LIFE).

Long-Term Care Insurance - Goes beyond medical care to include all of the assistance you could need if a chronic illness or disability leaves you unable to care for yourself for an extended period of time.

When most people think of long-term care, they think of nursing home care. But most policies will also provide coverage for care provided at home, in assisted living facilities or even in adult day care centers.

Since there's a 50/50 chance a person will need long-term care at some point in their life, it's an important consideration for most people.

There are two exceptions. Medicaid will typically pay for care for people with less than $2,000 in assets. So if you have modest assets, purchasing long-term care insurance might deplete your assets before care is needed. Conversely, if you have substantial assets and can afford to pay for care without significantly affecting your net worth, long-term care insurance is usually not recommended.

There are lots of different factors to evaluate when considering a long-term care insurance purchase (e.g., daily benefit, maximum benefit, elimination period, inflation protection, etc.). For more information about these and other key considerations regarding long-term care insurance, see the Association of Health Insurance Advisors (AHIA).

Sunday, March 16, 2008

How to Match the Right Insurance Policy to the 4 Stages of Life

As we go through life our needs change. A Young man or women with a family has very different insurance needs then the Empty Nester. Here is a guide to help you determine what type of insurance best matches your need based on the 4 Stages of life

Stage 1

While traveling the great state of Missouri one of the biggest objections I hear is why do I need life insurance. I'm young, single and healthy. That is the best time to buy life insurance. The younger you are and the healthier you are the cheaper life insurance is.

When you are still young and single you may not really need life insurance but that is the best time to buy it. A small whole life policy of 50,000 or maybe 100,000 is really is good investment for a young person. As long as you keep this policy in force no matter how old you get. No matter what happens to your health you will always have insurance.

Stage 2

You get married buy your first house and have a few children. At this point in your life you need enough insurance to pay off the mortgage if something happens to you and of course you would want to make sure there is enough money for your young growing family . Don't forget those college expenses A Term Policy or universal life policy are what you should be looking into during this stage.

Stage 3

A friend of mine says life begins when the dog dies and the kids graduate college. Your Home is paid off or nearly paid off. Your children are all on their on and no longer count on you for support. Your concern now is to have enough money for retirement. Your Life insurance needs aren't that great that 50,000 Life policy you got when you were in stage 1 might be all you need. Annuities, Universal Life and long term care are areas of insurance to look into during this pahse of your life.

Stage 4

The Golden Years. You want to make sure you don't outlive your retirement savings. You also want to protect the assets you have. Annuities and Long Term Care and Medicare Supplement would be your 3 main areas of concern during this satge of your life.

Thursday, March 13, 2008

Unit-linked schemes still upbeat on equity

MUMBAI:
If the current state of the marketplace is making retail investors jittery, then
insurance company functionaries state they are seeing small grounds of this. And
ironically enough, most coverage companies have got seen switching as well as fresh
inflows into unit-linked coverage programs towards equity finances from January till
date. Take for instance, Kotak
Life Insurance's numbers. In January and February, 90% of the electric switches have
taken topographic point from chemical bond (debt) to equity, forming 75% of the sum electric switch value. "I believe the retail investor
still believes that the implicit in economic system is strong. As of now, we don't see
any alteration in the trend. Any contrary alterations may take a piece and only if the
market goes on in the same way," states Gaurang Shah, head, Kotak Life. This is the same for Bajaj
Allianz Life and ICICI Prudential Life. While Bajaj Allianz Life have not seen
any important alterations in footing of switching, the new money flowing in is
directed to equity funds. ICICI Pru have got seen that almost 99% of the switches
from January 21 have been from debts to equity and even fresh influxes are
dominated by equity. However,
there have been a little alteration in the trend, in the sense the earlier the
bulk-99%-of the fresh influxes were towards equity, now 90% is towards equity
while 10% is towards balanced funds. "We keep that irrespective
of the state of the market, a client should look at the investing clip horizon
and hazard appetite," states Puneet Nanda, main investment officer, ICICI
Prudential Life. Most insurers
say in lawsuit of unit-linked coverage plan, short-term volatility have little
impact since the nature of the investing is long term. This is specially given
that there is a three twelvemonth lock-in time period stipulated by the regulator. "Any
switching that takes topographic point only takes to a notional game, because the investor
cannot make anything during the three-year lock in. So the client should remain
invested," states Vitamin D Kelvin Mehrotra, mendelevium LIC. "The current marketplace is a good
time for a under control long-term investor to purchase into the equity market," adds
Birla Sun Life Congress of Industrial Organizations Vikram Kotak. The family per centum of incursion to
equity marketplaces is low and it is because of this under-investing that the market
continues to stay attractive, state experts.

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Sunday, March 09, 2008

Kotak Life plans health product

Kotak Mahindra Old Mutual Life Insurance (KMOMLI) Limited, a joint venture between Kotak Mahindra Depository Financial Institution and London-based Old Mutual plc is planning to establish a standalone wellness coverage merchandise in the first one-half of 2008-09.

"The wellness coverage that we are going to establish volition be probably in the word form of a Unit Of Measurement Linked Insurance Plan (ULIP) and is likely to offer cashless transcation installation to the subscribers. We mean to restart dialogues with the different infirmaries for our wellness coverage strategy in the adjacent fiscal", Arun Patil, vice-president (training and direction development) of KMOMLI said.

The new wellness coverage merchandise would also offer an option to the endorsers for investment in equity but it will not transcend 50 per cent.

At present, Kotak makes not have got a full-fledged wellness coverage merchandise but have health covers for disabilities, critical unwellness and major surgeries.

These wellness covers come up in the word form of riders with Kotak's Life coverage merchandises to those endorsers who pay an other insurance premium for them.

Kotak Life Insurance which have already achieved a insurance premium aggregation of Rs 800 crore in this financial have put a mark of Rs 1,000 crore by the end of this fiscal.

"We are aiming at a insurance premium of Rs 2,000-2,500 crore in the adjacent fiscal. Kotak Life Insurance which now have 110 subdivisions in Republic Of India is also targeting to spread out its pan-India web to over 200 subdivisions by March 2009", Patil added.

Patil was there in the metropolis for a tie-up of Kotak Life Insurance with the Kolkata-based Aashika Insurance Broking and Hazard Management Limited for a novel strategy called 'Empowered Women' on the International Women's Day.

According to this scheme, women would have got to salvage a lower limit of Rs 1,000 per calendar month for twenty old age and on adulthood they would acquire Rs 5,51,257.

"We are looking to mobilise the nest egg of atleast a thousand women in the adjacent three years. This strategy initialy launched in Kolkata will be subsequently extended to other Indian cities", Narendra Kumar Tulsian, president of Aashika Insurance Broking claimed.

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Friday, March 07, 2008

Term Life Insurance - Why You Pay More

Do you really cognize you necessitate not pay more than than is low-cost to you while you acquire to best quality insurance that perfectly lawsuits you? Good then. You've been paying more than than than your deserved share in term life coverage because you have got got not imbibed the followers tips that gaze you in the human face -

a. You pay more because you have managed to gain yourself a bad drive velocity record, most of all in racing autos which all lend to measure up you for a very high charge per unit slam. Why, your breakneck velocity do you a high insurable hazard that could easily necessitate a fast claim.

b. You pay more than than your friend under the same policy because you probably belching fume and boom on banned drugs. You jeopardize your wellness and thereby jeopardize the insurer's concern of claims, therefore you are rated more than than for premiums.

c. You likely pay more owed to your abode community which is rated by the public as a red-zone, violence-prone area. There might be the likeliness of speedy indefensible decease in the country than in any other area. This do you a high hazard to your insurer.

d. Your line of work transports a higher danger of decease more relatively than others. Perhaps you are always in the most vulnerable portion of the mill where any flimsy accident could jeopardize your wellness or your life.

See why you pay more? But you necessitate not pay all that if you could see many insurance companies or their land sites for quotation marks and other footing that mightiness topographic point you in some word form of advantages, most especially in their policy insurance and affordability.

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Tuesday, March 04, 2008

LIC may pass on service tax burden to agents

While Budget 2008 have not mentioned anything about service taxation on coverage commissions, Life Insurance Corporation (LIC) is considering passing play on the taxation load to its agents or customers, according to beginnings in the public sector insurer.

Life coverage companies, both authorities and private, had sought decrease in the current service taxation charge per unit of 12.5 per cent.

LIC have been absorbing liabilities arising out of service taxation on agent commissions, leaving its 13 hundred thousand agents free off this burden. A senior LIC functionary said that LIC's new concern insurance premium (NBP) income was Rs 55,395 crore during 2006-07.

Considering that the norm committee per policy is at 10 per cent, the corporation would have got paid around Rs 5,500 crore as the committee of the agents. Here, the service taxation at 12.5 per cent plant out to about Rs 700 crore, which have been borne by the the insurance company on behalf of the agents.

This figure is only for NBP income and if the committee on policy renewals is added, the service taxation load would be much higher for LIC, the functionary added.

With gradual addition in service taxation rates, it may not be possible for LIC to absorb the service taxation load in full.

"Going forward, we may have got to go through it on to our agents or customers, either a part of it or full. In this epoch of intense competition, we cannot afford to lose our clients by giving them less bonus. So, we might stop up passing on the load to the agents," the senior functionary added.

He added that from April to December 2007, LIC collected NBP of Rs 34,595 crore, which is likely to travel up to Rs 60,000 crore by the end of the current fiscal year. A 10 per cent committee for this amount plant out to Rs 6,000 crore. And, the service taxation amount plant out to Rs 750 crore at the charge per unit of 12.5 per cent.

However, in the lawsuit of private insurers, the service load have been passed on to the agents. During 2006-07, private insurance companies collected NBP income of Rs 19,471 crore for which committee worked out to about Rs 3,000 crore. The service taxation amount of Rs 350 crore was born by the agents.

It is also estimated that life coverage companies, including LIC, are likely to accumulate NBP of Rs 1 hundred thousand crore during the current fiscal year, on which committee of 10 per cent will be levied (to around Rs 15,000 crore). On this commission, life coverage companies will have got to blast out Rs 10,000 crore as service tax.

A senior functionary with a private life coverage company pointed out that insurance companies will now confront the challenge of retaining their agents. Insurers are trying their best to maintain abrasion degrees low by giving inducements directly and indirectly. If the service taxation load is passed on to the agents, it will impact their income levels, which may take to higher attrition, state industry watchers.

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