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PDF version Increase in Provincial Premium Tax on Universal Life Policies in Alberta
In its October 2015 Budget, Alberta announced an increase in the premium tax levied on life insurance policies in the province of Alberta. As a result of this change, the total premium tax rate on Alberta policies has increased from 2% to 3%.
This premium tax is assessed on any deposit made into the tax-deferred accounts of universal life policies. This change in premium tax rates in Alberta does not change any of the premiums or billing amount of any Term, Critical Illness, or Traditional Whole Life plans.
Minimum premium calculations on most BMO Insurance universal life plans will be changed as a result. The change will be implemented and charged on any amounts deposited into universal life plans on or after April 1, 2016.
During the month of February, policy owners whose current billed amount is not sufficient to cover the new minimum premium will be advised of the increase, including the new premium amount that they will be billed on or after April 1, 2016.
During the same time, policy owners whose billed amount will be unaffected will also be advised of their new minimum premium, but that their billed amount will not be changed.
We encourage you to work with clients to ensure that their planned premiums continue to be aligned with their insurance objectives.
Enclosed, you will find a sample of the various letter options that will be sent out to policy owners of policies that are inforce by March 31, 2016 and are affected by this tax rate change.
The Wave v32.1 illustration software will be available for download on April 1, 2016 and will reflect the new minimum premiums for universal life in Alberta.
Policies that are still pending after March 31, 2016 must submit a Wave v32.1 illustration as a requirement to settle the policy.
Policies issued on or after April 1, 2016 will display the new minimum premium and tax rate on the Policy Information Pages.
The attached e-mail broadcast will be sent shortly to Advisors in Alberta. We recommend that you also send this message to your Advisors.
If you have any questions about the details of this change and how it affects universal life clients in Alberta, please do not hesitate to give Client Services a call at 1-800-387-4483.
BMO Insurance
