Tax exemption urged for microinsurance

 
Tax exemption urged for microinsurance
 
Microinsurance companies are urging the House of Representatives to enact a law that will exempt microinsurance from taxes to bring down its cost and directly benefit Filipinos, a press release from Congress said.

The microinsurance companies made the appeal during a recent symposium on the present concept of microinsurance and its current state in the country.

Jhun Benedicto, Chairman of Philippine Insurers and Reinsurers Association, the umbrella organization of all non-life insurance companies in the Philippines, removing the taxes will bring down the cost of microinsurance by about 25 percent.

"The tax exemption will directly benefit our fellow Filipinos. As of now, the taxes on non-life insurance policies include the 12.5 percent documentary stamp, 12 percent EVAT, 0.5 percent local government tax, 2 percent fire service tax (for fire policies)," Benedicto said.

He said the tax exemption will also be the government's contribution in ensuring that the poor are given access to financial services in general, and insurance in particular.

Microinsurance provides specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events, the press release said.

These include all forms of insurance, as may be defined by concerned regulatory bodies and comprise premiums and contributions, fees or charges are collected or deducted before a contingent event; and guaranteed benefits are provided upon occurrence of a contingent event, the press release said.

There is a low insurance coverage among many Filipinos because of reasons like the lack of awareness of insurance and low financial literacy level among the low-income sector, it added.

Various case studies of the Microinsurance Center show that the poor either lack an understanding of insurance or have a negative perception or distrust of it, the press release also said.*

 

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