What is Premium Tax or IPS in insurance?

Taxes affect everything, including life insurance. In fact, to the expenses of the premium is added the payment of a series of taxes that are charged when contracting the policy. We are talking about one of the highest. What is Premium Tax or IPS in insurance?

IPS: 20 years of history

This type of tax has been in Spain for two decades. Is about 6% of the net premium for additional coverage, not including the death guarantee. It is reflected in the periodic receipts we receive when taking out life insurance. It is important to guarantee that the taxes are being properly complied with, so insurance brokers must inform their clients about this tax and its cost, and that it is clearly seen in the collections.

It must be borne in mind that not all Insurance covers this type of tax: personal insurance is excluded, with some exceptions. In fact, in the case of life insurance, it should not be taxed per se, only if there is complementary coverage, such as in case of accidents. But it does not include it, if the policy only has a death guarantee.

It is common for the IPS tax to be present in all insurance and premiums that involve some type of damage, as common as car or home insurance and in capitalization operations. It is a way of creating a logical and fair taxation for both insurers and policyholders, who can have the peace of mind that they are paying well-implemented taxes.

Insurance exempt from paying the IPS

Medical insurance and health insurance do not have to pay Premium Tax. Neither credit insurance nor surety. To these exemptions must be added mandatory social security, including pension funds and systems that are stipulated as an alternative to plans.

Lastly, there are some types of operation that remain outside the tax, such as those that include the contracting of review plans, those that focus on reinsurance and processes that are related to the transport of merchandise with international coverage.

Has it become clear to you what Premium Tax or IPS is in insurance? In that case, if you are considering taking out insurance, it is essential that you take it into account, although in an insurance brokerage like ours they will inform you of everything and in detail. Because, did you know, for example, that in case of collecting life-savings insurance after an accident, you have to pay personal income tax?

Although it can be cumbersome, it is not at all, as our experts can show you by calling 91 218 21 86 – 932 990 416.

Complying with all taxes will help families have a lot less headaches in tough times when other concerns are on your mind.

Leave a Comment