by NURUL SUHAIDI / pic by BERNAMA 

THE Life Insurance Association Malaysia (LIAM) proposed the government to include medical insurance premium in the tax relief of RM8,000 which is for medical expenses for self, spouse and children in the upcoming Budget 2022.

In a statement yesterday, the association also proposed the government to look into increasing the current combined tax relief of RM3,000 (for medical and health insurance premiums, and premiums for education insurance) to RM6,000.

LIAM said the suggested proposal would help lift the burden of potentially large medical expenses from the taxpayer due to the pooling of risk and to utilise their current income to fund their future long-term medical needs.

“By increasing the tax relief for medical and health insurance premiums, families don’t have to compromise the purchase of education insurance for their children,” said LIAM president Loh Guat Lan (picture).

She added that an education insurance policy is important as it serves as a savings tool to provide an amount for education costs when the children reach 18 years or above to enter college.

“Failing to prepare for the children’s education could prevent them from reaching and maximising their full potential.”

Apart from that, LIAM also proposed the government to increase personal tax relief for life insurance premiums from RM3,000 to RM5,000, to ensure the family has a better safety net in times of uncertainty to protect the family and their dependents in the event of any unforeseen circumstances.

“Having a life insurance policy that can cover the total cost of the financial planning is important such as costs associated with accidents, disability, illness and death,” she added.

Additionally, LIAM is also hoping the government will consider the waiver of 6% service tax on the Group Employee Insurance Scheme.

“This can help encourage employers to insure their staff under a group insurance scheme which subsequently increases the penetration rate of workers,” she said in the statement.

It noted that, based on published statistics, less than half of the employees are being covered by any form of group insurance.

“Depending on the future cost of healthcare, on average we assume that the hospitalisation claim cost to range between RM4,000 and RM6,000, this can potentially help the government to save between RM598 million and RM1.8 billion per annum, in the form of reduced public healthcare spending,” she added.

Loh said by having more Malaysians covered under private group medical insurance, it will help to lessen the burden of the public healthcare system, from both financial and capacity angles.

“The insurance industry is well-positioned and in full alignment to support the government in providing an insurance safety net for all Malaysians, especially the B40 (bottom 40% income) group,

“This move is also in line with the national agenda of increasing insurance penetration rate while extending the insurance safety net to as many Malaysians as possible,” Loh added.

The waiver is expected to help reduce businesses’ operating costs while encouraging small and medium enterprises to keep their insurance coverage and lessen the burden of the public healthcare system.

Lastly, LIAM is proposing the government extend the period of the RM50 Perlindungan Tenang Voucher (PTV) Programme for B40 for another year, for example, from 2022-2023.

Under this programme, eligible Bantuan Prihatin Rakyat (BPR) recipients will be given RM50 voucher as financial aid to purchase Perlindungan Tenang products as financial protection against key risks in life such as death, accidents, fire or other unfortunate events in the form of insurance or takaful protection.

As the incentive is extremely encouraging and developed to incentivise the youth, young families and B40 household segment to purchase life insurance, LIAM is hoping government considers the extension so that the BPR recipients may have more time to learn and accept insurance or takaful protection as part of their family’s financial planning.

Through the PTV programme, it is hoped that it can fulfil the nation’s financial inclusion agenda of achieving higher insurance penetration in Malaysian households and build resilience among the population.

He added that the life insurance industry plays an important role in various aspects of the Rakyat’s wellbeing, such as financial protection, financial accumulation and healthcare funding.

Hence, 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 for the nation.