The South Australian Government has found a new insurance tax lurk, this time with life insurance. It’s slugging life insurance policies which have “life rider” benefits with an additional 500% increase on premiums.

The benefits ttached to life policies are typically trauma and total and permanent disability cover. Investment and Financial Services Association (IFSA) CEO Richard Gilbert has gone public with his frustration over the SA decision, saying the “unfair and inequitable” increases will mean the burden over the life of a typical policy will soar from about $500 to $2500. In all other states, the stamp duty on similar products is about $69.

“The industry will have to accommodate two calculation and payment methods – one for Australia and one for South Australia,” he said.

Mr Gilbert says despite several attempts, SA Treasurer Kevin Foley remains unmoved and unmoving. “IFSA’s advice states that the Government’s intentions are contrary to the law, yet instead of providing some clarity, the Treasurer’s door remains firmly closed to discussion on this issue.”

He says the taxes may prompt life insurers to consider withdrawing from the SA market.