



Premium Levy: What Is It, and How Is It Calculated?
18th June 2024


How is the levy calculated?
The levy payable is the lower of: The premium amount paid in that policy year, multiplied by the 0.1% levy rate The levy cap (HK$ 100 for life insurance, HK$ 5,000 for general insurance)
Please see the examples below.
Example 1: Levy payable is less than the cap
John has individual medical insurance. His monthly premium is HK$ 600, which means he pays HK$ 7,200 in health insurance premiums in the policy year (HK$ 600 * 12 months = HK$ 7,200).
The levy payable is the lower of:
- HK$ 7.20 (premium amount paid * 0.1% levy rate) = (HK$ 7,200 * 0.001)
- HK$5,000 (levy cap for general insurance)
Therefore, John’s premium levy is HK$ 7.20 for this policy year, and the total amount he must pay is HK$ 7,207.20 (premium + levy).
Example 2: Levy payable exceeds the cap
Vanessa has a life insurance policy. Her annual premium is HK$ 150,000.
The levy payable is the lower of:
- HK$ 150 (premium amount paid * 0.1% levy rate) = (HK$150,000 * 0.001)
- HK$ 100 (levy cap for life insurance)
Because the levy calculated exceeds the levy cap, Vanessa’s premium levy is HK$ 100 for that policy year, and the total amount she must pay is HK$ 150,100 (premium + levy).
The examples above should give you a good idea of what premium levy you can expect to pay. Remember that if you have more than one insurance policy, the levy cap would be applied per policy, per policy year. To find out the exact amount of premium levy you must pay, it’s best to contact your insurance broker or insurance company.
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This article was independently written by Alea and is not sponsored. It is informative only and not intended to be a substitute for professional advice and should never be relied upon for specific advice.