KUALA LUMPUR – The Life Insurance Association of Malaysia (LIAM) has proposed that tax relief for medical and health insurance premiums be increased under Budget 2022, president Loh Guat Lan said.
She said it can be increased by one of the options, namely to allow the current tax relief of RM8,000 for medical expenses on self, spouse and children for serious diseases be extended to include medical insurance premiums; or to increase the current combined tax relief of RM3,000 (for medical and health insurance premiums and premiums for education insurance) to RM6,000.
“The rationale behind this proposal is firstly, it will lift the burden of potentially large medical expenses from the taxpayer due to the pooling of risk.
“Secondly, the cost of medical expenses typically increases with age and taxpayers are utilising their current income to fund for their future long-term medical needs,” she said in a statement today.
Loh said 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,” she said.
In addition, she said the association asks the government to increase the current limit of personal tax relief for life insurance premiums from RM3,000 to RM5,000; waiver of 6.0 per cent service tax on Group Employee Insurance Scheme; and extension of the RM50 Perlindungan Tenang Voucher (PTV) Programme for B40 for another year i.e from 2022-2023.
“LIAM would like to propose that the 6.0% service tax on Group Employee Insurance Scheme be abolished. This will encourage employers to insure their staff under Group Employee Insurance Scheme and thereby increasing the penetration rate of workers.
“Based on published statistics, less than half of employees is being covered by any form of group insurance. This leaves a significant insurance gap that needs to be closed, to extend the insurance safety net to as many Malaysians as possible,” she said.
On the extension of the RM50 PTV Programme for B40 for another year i.e. from 2022-2023, she said recipients need time to learn and accept insurance/takaful protection as part of family’s financial planning.
She said the availability of Perlindungan Tenang products is important in providing immediate temporary relief in the event of misfortune, able to access financial resources and having peace of mind knowing that financial relief is available in an easy and timely manner.
“The industry hopes that by extending the incentive for another year, it would benefit majority of B40 households in the country.
“Ultimately, as part of the insurance and takaful industry’s aspiration, the PTV Programme hopes to fulfil the nation’s financial inclusion agenda of achieving higher insurance penetration and household resilience among the population,” she added.