Life Assurance Exit Tax (LAET) - Changes?

Corola said:
If the allocation rate is quoted gross of the levy then they don't interact with each other.

1000 - (1000 * 1%) + (1000 * 1%) = 1000
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It's not. It's net of the levy.

I had this clarified by Zurich Life years ago when my broker consultant said they'd cover the levy. I told him that wasn't strictly true as the 1% is on the net amount after the levy. He double checked it and confirmed it. Below is from the Zurich Life policy schedule on a regular saver plan. Other life companies are the same.

The difference is very small but the additional 1% allocation does not cancel out the 1% levy.
 
That's not right. This is the calculation if quoted net of levy:

1000 is the total premium paid by the consumer gross of the levy.

So 1000 = 101.00% of Premium excluding Levy
Premium net of levy = 1000 / 101% = 990.10
Levy = 990.10 * 1% = 9.90
Premium made whole again by 101% allocation = 990.10 * 101% = 1000

The 1% allocation does cancel out the 1% levy. The consumer sees the full amount they invested.
 
Last edited:
You have your sequence wrong.

The levy is taken from the contribution of €1,000. €990 gets an allocation of 101% = €999.90 invested/
 
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