Thus, the following types of income are now excluded from the income of an individual subject to taxation: insurance payments carried out by insurance organizations under accumulative insurance contracts, insurance premiums paid by an individual in his favor and (or) in favor of his close relatives, spouse and (or) by employer in favor of his employee; redemption amounts paid by insurance organizations under accumulative insurance contracts. “And also the income of an individual is exempt from tax on the size of the insurance premium (if an installment plan is provided) within 320 times the MCI paid during a calendar year by a resident individual under a cumulative insurance agreement concluded for a period of three years or more. The tax deductions have previously applied if the policyholder and the insured were the same person,” reminds Gulzhan Dzhaksymbetova, the Board Chairman of LIC Centras Kommesk Life.
In addition, the redemption amounts paid by an insurance organization to an individual upon termination of a cumulative insurance contract are now exempt from taxation.
“These changes will allow such a category of clients of the insurance company to receive the full amount of insurance benefits without withholding a 10% income tax, as it has been before the relevant amendments. As practice shows, such an amount is significant both for clients who have decide to terminate the endowment life insurance contract ahead of schedule since they have an urgent need to receive funds, and for insurance payment beneficiaries who need payment to reimburse expenses arising from the occurrence of insurance events in connection with an accident, illness, and so on,” explains Vitaly Lyubimov, the Managing Director of LIC Halyk Life.
According to experts, the development of endowment insurance contributes to the development of the economy as a whole. “First of all, the growth of endowment premiums affects the level of total savings of the population. Secondly, long-term commitments and sustainability in relation to own cash flow provide ideal sources of long-term financing for governments and businesses, - notes Elena Taytugoleva, the Managing Director of LIC Nomad Life. - In addition, thanks to endowment life insurance, the difference between short-term and long-term interest rates is reducing. This is improving the financial structure of the enterprises’ business by reducing the cost of long-term capital and weakening the risks of refinancing."
Endowment influences the development of the long-term government bond market, which significantly expands the range of options for government debt management.
“This product can also replace and complete the state social security program (social pension systems), compensate for the inadequacies of the state social insurance and security system (accumulation of certain sums of money for retirement or other purposes),” adds the Nomad Life executive.
Tax incentives will eventually affect the number of products on offer. “These measures will stimulate insurers to healthy competition, new insurance products development and service improvement,” concluded the Chairman of the Board of LIC Centras Kommesk Life.