IRC wants individuals' life insurance premiums exempted from income-tax
The Insurance Regulatory Commission (IRC) wants life insurance premiums paid by individuals exempted from income-tax, arguing that this will create a greater demand for life insurance.
Under the current law, only companies and institutions paying life insurance premiums for their employees, for work accidents or deaths are exempted from income-tax.
“We have asked for an amendment to the law to encourage individuals to insure their lives,” says commission director general Bassel Hindawi. Hindawi noted that life insurance is not a large portion of the local insurance market.
“In the US and European countries, the demand for life insurance is 60 percent compared to 40 percent for non-life insurance,” he explained. “Unlike these developed insurance markets, life insurance only makes-up 15 percent of the industry in Jordan.
”Endorsing the amendment, believes Hindawi, would boost investment in the insurance sector as premiums will form a capital base to finance economic activities. Raouf Abu Jaber, chairman of the Jordan Insurance Federation, holds the same view.
“There is a social benefit if the amendment is approved; as it offers post-death financial protection to families and more cash in the hands of insurance companies for investment,” commented Abu Jaber, who is also general manager of the United Insurance Company.
Fathi Ibrahim, deputy assistant at the Arab Insurance Company expects an upturn in the life insurance industry if the amendment takes place. “Being a voluntary type of life-insurance, the step might increase demand,” he added. Jihad Khasawneh, head of the legal section at the Income Tax Department said the proposal is still under study and declined to give the date when a decision would be reached.
However, if companies for their part offer lower life-insurance premiums, the volume of subscriptions is bound to increase, believe many industry experts. “Exempting salaries from income-tax means losses to the treasury. Why should the government bear the losses?” asked one employee who preferred to remain anonymous. “Rather than asking for the amendment, premiums should be cut down,” he added. ― (Jordan Times)
By Rana Awwad