KUALA LUMPUR – In conjunction with the tabling of the 2021 Budget by the Minister of Finance Malaysia, YB Tengku Dato’ Sri Zafrul Aziz, LIAM wishes to reiterate our wish list in promoting financial inclusion and increasing awareness on the importance of financial protection among the Rakyat.
Based on LIAM’s statistics, in 2019, the life insurance industry paid out a total of RM11.9 billion in benefit payout. A significant part of this payout, totalling RM4.9 billion or 41% in 2019, is for medical insurance.
In order to encourage Malaysians to plan for their needs for protection, medical and health needs and education of their children, we propose the following:
1. To increase the current limit of RM3,000 Tax Relief for Life Insurance premium to RM5,000.
2. To increase the current limit of RM3,000 Tax Relief for Education and Medical insurance premium to RM6,000.
As part of the Government’s stimulus package to combat the economic impact of COVID-19, the i-Lestari programme was introduced, allowing withdrawals from the EPF Account 2. EPF members aged 55 years and below and have savings in Account 2 can withdraw up to RM500 a month for a maximum duration of 12 months (April 2020 to March 2021).
This support could be in the form of a subsidy for the premium of a Perlindungan Tenang – Mampu & Mudah plan for a limited period of time, say 2 years.
This will provide an opportunity for the B40 group to appreciate the importance of life insurance protection (particularly if the insured member or family receives a claim) and to continue with the insurance after the 2-year period.
Recognising that premium affordability is key, we further propose that the Government provides a 1-to-1 subsidy for the premiums paid by this group of Rakyat therefore bringing down the effective cost to them to below RM0.50 per day.
For a start, the 1-to-1 subsidy could be given to 10% of the lowest poverty household in Malaysia or those who receive subsidy under the Bantuan Sara Hidup scheme. This subsidy could be granted on a voluntary basis.
For instance, an individual under the Bantuan Sara Hidup scheme can select whether or not he/she wishes to purchase Perlindungan Tenang – Mampu & Mudah.
If the premium for this individual (and his household) is RM100 per annum; the insurance premium payable by this family will be RM50, and the RM50 could be deducted from the Bantuan Sara Hidup disbursement. The balance of RM50 will be supported by the Government.
Ultimately, it is hoped that through the Government’s support in pushing the B40 segment to take up Perlindungan Tenang – Mampu & Mudah protection plans for themselves and their families, it would help to materialize the nation’s aspiration of insuring 75% of the population.
With proper advanced planning and the right tax structure, the private sector and the Rakyat can be incentivised to play a bigger role and form a public-private sector partnership with the Government in sharing the cost of various social economic benefits associated with a developed nation.
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