Budget 2023: Liam hopes govt will increase life insurance tax relief
15 Sep 2022 08:41am
Life lnsurance Association of Malaysia (Liam) logo taken from LIAM's official Facebook page
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 a total permanent disability which prevents them from working and earning for the family.
Liam 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 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 an 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.
As of end-December 2021, over 1.7 million vouchers worth over RM85 million were redeemed by the BPR recipients under the RM50 PTV.
Meanwhile, over 3.7 million vouchers worth over RM272 million were redeemed by BKM recipients under the RM75 PTV as of Sept 6.
"The PTV RM75 will end in December 2022 and we hope the government will extend it to 2024,” Liam said.
The association also asked for a waiver of six per cent service tax on the Group Employee Insurance Scheme.
Under the existing tax regime, the premiums for group insurance schemes are subject to service tax, resulting in costlier premiums which may not be affordable for some employers, especially small and medium enterprises (SMEs).
"Waiving the six per cent service tax for group insurance schemes will encourage more employers to take up group insurance for their employees as premium affordability is a key factor for purchase.
"It will also help to reduce business operating costs while encouraging SMEs to keep their insurance coverage and reduce the burden on the public healthcare system,” it said. - Bernama
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