Premium Tax

[Shornwick00]

How can I take advantage of SD 8bps premium tax? I understand that most carriers build this into premium charges and average this tax (around 5%) across states.

For example, a SD trust owned policy will still have roughly 5% premium charges (using MN Life eclipse in this example).

Thank you!

Steve

 

[Stevekobrin]

That is a very interesting question. I could see where you are coming from because South Dakota has the lowest state premium tax (see below), which I assume is why you are asking.

I have not personally become involved in designing a life insurance case with the primary focus on this consideration; however, I know advanced underwriters who do. If you would like further assistance, feel free to PM me and we can talk

Premium Tax Planning | South Dakota Trust Company | Trust Company South Dakota

 

[meclimit]

You are correct that many carriers socialize the cost on term and whole life.

But the invention of UL also allowed the unbundling of the premium tax, and many carriers simply pass along the premium tax applicable in the state where the premium is collected.

If there were any justice in the world, the citizens of SD wouldn't subsidize the people in CA. Auto insurers have state specific pricing (accounting for taxes, loss rates, risk, etc.), but life insurers aren't necessarily that sophisticated.