1. What is levy?
With effect from 1 January 2018, levy will be collected from Policy Owners by insurance companies on behalf the Insurance Authority ("IA") according to Insurance (Levy) Regulation and Insurance (Levy) Order in order to support the operation of IA. Policy Owners shall pay the levy at applicable levy rate and levy cap along with their premium payment.
2. What kind of policies will be subject to levy and the Policy Owners have to pay for?
According to the law, except for certain policies exempted from the levy by law#
, the Policy Owners of all new or in-force life insurance policies and general insurance policies (including travel, motor, property and household insurance) shall pay levy along with their premium payment.
Reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy.
3 Has IA prescribed the levy rate and levy cap?
In the case of life insurance,the levy rate for phase 1 will be 0.04% with levy cap at HKD $40*
, and increase gradually until it reaches 0.1% with levy cap at HKD $100*
||1 Jan 2018
to 31 Mar 2019
|1 Apr 2019
to 31 Mar 2020
|1 Apr 2020
to 31 Mar 2021
|From 1 Apr 2021 onwards
Group life insurance policies with medical protection offered by employers will be subject to the levy cap for general insurance policies.
4 What criteria will be used by BOC Life to determine levy rate and levy cap?
According to the requirement provided by IA, policy "inception date" (new policies) and inception anniversary date (in-force policies) will be used to determine the levy rate and levy cap. "Inception date" means the date on which the first premium under contract becomes payable. We will use policy date as policy "inception date" to determine levy rate and levy cap.
5. Are Policy Owners required to pay levy for premium paid before 1st Jan 2018?
Except prepaid premium, Policy Owners are not required to pay levy for the premium paid before 1st
Jan 2018. For the amount prepaid before 1st
Jan 2018, as it will only become premium payable on policy "inception date" or future inception anniversary date, therefore, Policy Owners shall pay levy for those premium. A notice will be sent separately to Policy Owners to pay the relevant levy.
6. How can Policy Owners know the arrangement on collection of levy by BOC Life and the amount of levy to be paid?
For existing clients before the effective of collection of levy and have to pay levy after 1st
Jan 2018, we will notify them of the Default Arrangement on collection of levy via SMS, letter or phone call by our Customer Service before the effective date of collection of levy. The amount of levy to be paid will be reflected in relevant documents such as Premium Notice.
For all new clients who make insurance application starting from the commencement of collection of levy, they can refer to relevant proposal for the amount of levy.
7. How can Policy Owners pay levy?
Levy will be collected together with the premium via the same manner whenever we collect premium from Policy Owners (Default Arrangement).
(i) If Policy Owners choose to pay premium via autopay from bank account or credit card, we will collect levy together with premium. Policy Owners should pay attention if account balance or credit limit is sufficient for the full payment.
(ii) If premium is paid by Automatic Premium Loan ("APL"), levy with be collected together with premium via APL and interest will be charged according to policy provision.
(iii) If there is unpaid premium of policies at the time of claim application, unpaid premium and corresponding levy will be deducted from the policy proceeds payable to Policy Owners or beneficiaries by default settings.
8. How Policy Owners or beneficiaries inform BOC Life if they object to the above Default Arrangement on collection of levy?
If Policy Owners or beneficiaries object to the above Default Arrangement and elect to pay levy separately after receiving the notice, they may contact our Customer Service for arrangement.
9. What will be the consequence if Policy Owners do not pay levy?
According to the law, the implementation of levy should not affect the policy coverage. If Policy Owners only pay premium but refuse to pay levy, we will report the corresponding outstanding levy records to IA according to the requirements, and a pecuniary penalty may be charged by IA against Policy Owners. The IA may recover outstanding levy as a civil debit due to it.
10. Under what circumstances will the levy be refunded to Policy Owners?
Refund of levy is allowed if the corresponding premium becomes partially or fully refundable (unless the amount of levy payable on premium after refund still reaches the cap). The levy will be fully refunded if the policy is cancelled during cooling-off period.
11. Where extra information and suggestions could be found?
You can visit the IA website http://www.ia.org.hk/
for more information related to levy.