Govt needs to increase tax relief for life insurance

KUALA LUMPUR: The Life lnsurance Association of Malaysia (LIAM) is hoping that the government would increase personal tax relief for life insurance premiums from RM3,000 to RM5,000 in Budget 2023.

The association said the Covid-19 pandemic has made everyone realise how uncertain life can be and highlighted the importance of protecting oneself and loved ones financially during unforeseen circumstances or the passing of a breadwinner in a family.

“Having a life insurance policy is an important part of financial planning because it protects you and your loved ones from the costs associated with accidents, disabilities, illness and death,” LIAM told Bernama.

Life insurance is necessary as it can help one’s family to sustain their lifestyle in the event of a breadwinner’s demise or if they suffered total permanent disability which prevents them from working and earning for the family.

LIAM also is also proposing for the government to include medical insurance premium in the tax relief of RM8,000 which is for medical expenses for self, spouse and children, or to increase the tax relief for education, medical and health insurance (MHI) as well as MHI plans from RM3,000 to RM6,000.

An education insurance policy is important as it serves as a savings tool to cover the cost of tertiary education and this will help families to reduce reliance on education loans.

It was reported that as of November 2021, the accumulated student loans stood at about RM40 billion, involving one million students. Given the rising fees for tertiary education, parents today should be encouraged to take up an education policy as financial planning to fund their children’s future education.

Currently, there is a RM3,000 tax relief available to taxpayers on insurance premiums paid for medical and education insurance policies combined.

“We wish to highlight that this amount is indeed insufficient in most circumstances as the cost of medical insurance for an average family of two adults and three children is about RM2,500 per annum at the lower end.

“Hence, there is only RM500 savings for premium per annum for this family to support the education policy of the three children, which is not enough.

“Given the importance of having health insurance for Malaysians, the tax relief for this type of insurance plan should be increased,” LIAM said.

The association also hopes for the extension of the Perlindungan Tenang Voucher (PTV) Programme for the B40 income group.

The government introduced the PTV Programme under Budget 2021 to provide better social protection for the B40 group.

Under this programme, all B40 Bantuan Prihatin Rakyat (BPR) recipients were given a RM50 voucher as financial aid to purchase Perlindungan Tenang products.

The RM50 PTV programme ended in December 2021 and was replaced with the RM75 PTV programme which is being offered to the Bantuan Keluarga Malaysia (BKM) recipients, and the response to both programmes was very encouraging.