PETALING JAYA: As the country prepares to become an ageing nation, the government should consider increasing tax relief for life insurance premiums.

This is because with higher life expectancy rate, Malaysians now need longer and comprehensive life and medical insurance coverage, says the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

 “The RM3,000 cap for life insurance tax relief is not commensurate with the longevity of Malaysians, who can easily live up to 70 nowadays,” said ACCCIM treasurer Datuk Koong Lin Loong.

Koong, a tax expert, said the tax relief for life insurance should be doubled to RM6,000 from the current RM3,000 in Budget 2025.

Similarly, the tax relief for medical and education premiums should be doubled to RM6,000.

He said increasing tax incentives should not burden the government but would allow taxpayers to be given relief for their insurance policies.

The tax expert also called for the government to monitor insurance companies if the relief was increased, to ensure that consumers do not face price hikes in their policies.

Currently, tax relief for life insurance premiums and additional voluntary Employees Provident Fund (EPF) contributions is up to RM3,000. The tax relief for education and medical insurance is up to RM3,000 for self, spouse or child.

Recently, Malaysia Takaful Association (MTA) also urged the government to increase tax relief for life, education and medical insurance premiums in Budget 2025.

The association said the tax relief would help ease burdens after a significant rise in insurance premiums in recent years, Bernama reported.

MTA elaborated that medical repricing was a complex challenge, with significant implications for healthcare costs, takaful coverage, and consumer access to medical services.

It said the industry was also grappling with inflationary pressures and market volatility this year, adding that the rise in the service tax rate to 8% on March 1, from the previous 6%, has further increased costs for group takaful and insurance policies.

Supporting MTA’s call is the Federation of Malaysian Consumers Associations (Fomca), which said an enhanced tax relief would provide critical financial support for consumers, encouraging better access to medical coverage.

Fomca chief executive officer Dr Saravanan Thambirajah said that increasing the tax relief would allow more people, especially those in the middle-income segment, to get affordable medical insurance.

“The government should also look into increasing taxes on insurance companies that impose higher premiums in the name of medical inflation.

“It is essential to regulate how insurance companies determine and plot medical inflation, as there is currently no government oversight on the matter,” he said, adding that there were reports about increasing medical insurance premiums for senior citizens and retirees.

Saravanan said the government should consider giving out incentives for companies to offer more affordable, flexible policies and create subsidies for lower-income groups.

Meanwhile, vice-chair of the International Chamber of Commerce Global Taxation Commission Dr Veerinderjeet Singh said providing more tax relief would only impact 15% of the labour force, and cause a loss of tax revenue to the nation.

He instead proposed for improvement on healthcare services and better awareness of medical and health insurance.

“It is more about people budgeting adequately and associations continuing to educate consumers on the importance of medical and health coverage.

“We must push the government to improve healthcare support services and to ensure greater competition, which may lead to less increases in insurance premiums and better services,” he said.

https://www.thestar.com.my/news/nation/2024/10/04/ease-insurance-for-everyone