Govt urged to raise tax deduction on life insurance
Industry proposes an alternative if incentives for LTF dropped
The government has been urged to raise the ceiling on tax deductions for life insurance, to make this an alternative if tax incentives for long-term equity funds are not renewed in 2016.
Advance Life Assurance managing director Chaophan Phanthong said the industry had discussed the proposal to end tax breaks for LTFs, noting that life insurance would become more attractive for investors if the ceiling were raised.
He said that even though insurance would benefit anyway if the LTF tax incentives were not renewed, the government should encourage people to be aware of the importance of financial planning.
“The government should raise the ceiling on tax deductions for a savings insurance policy with a term of 10 years from [the current] Bt100,000 to Bt200,000, and raise the ceiling for annuity insurance from Bt200,000 to Bt300,000, as this would help motivate working-age people to set up their financial plans and prepare for retirement,” Chaophan said.
He said LTFs had been attractive investment instruments thanks to the tax incentives. According to data from the Association of Investment Management Companies, as of September 19, there were 52 LTFs in Thailand with combined value of Bt245 billion, representing 26.77 per cent of total equity funds and representing 6.46 per cent of total funds in the Kingdom.
Another tool
“Even though it is unclear whether the government will renew the tax incentives for LTFs, if they are not renewed, investors will have to seek another tool for tax reductions and diversification. Therefore, insurance is a choice, because this investment will continue to offer a personal-income-tax deduction,” he said.
Insurance programmes are designed to help people make long-term financial plans and protect their financial security into retirement. Life insurance also contributes to economic growth and helps strengthen households’ savings, Chaophan said.
In the first eight months, premium income for the Thai life-insurance industry grew by 15.51 per cent year on year to Bt331.14 billion. Of that, premiums from new business totalled Bt116.523 billion, up 17.04 per cent year on year, while renewals accounted for Bt214.626 billion, up by 14.7 per cent.
