LIAM wants separate tax relief for EPF contributions, tax cut for life insurance premiums

KUALA LUMPUR: The Life Insurance Association of Malaysia (LIAM) wants a separate tax relief for the Employees Provident Fund (EPF) contributions and tax deduction for life insurance premiums.
In a statement today, LIAM said its wishlist for 2016 Budget was for the change so that it would promote financial planning and create awareness on the importance of financial protection among the rakyat.
LIAM president, Toi See Jong, said at the moment RM6,000 tax relief on combined EPF and life insurance premiums was given to the rakyat.
"With rising wage level, the EPF contributions have taken up a substantial portion of the RM6,000, leaving an ever-diminishing amount left to be claimed as tax relief on insurance premiums," he said.
The EPF savings served the purpose of meeting long-term savings needs whereas life insurance primarily for the financial protection with a secondary aim of long-term savings, he said.
Toi said a separate tax relief would put more money back into the rakyat's pocket to relieve them off their financial burden and also to encourage them to have a better financial plan in the future.
He said besides becoming more self-responsible for financial planning, this would further improve the insurance penetration rate in line with the Economic Transformation Programme's objective to insure most of the population, or 75% by 2020.
LIAM also proposed that the tax relief for medical and education insurance premiums be increased from the current RM3,000 to RM6,000 as the amount was insufficient in most circumstances.
"For example, for an average family of two adults with three children, the cost of medical insurance is around RM2,500 per annum at the lower end, which leaves only about RM500 per annum premium for savings, towards the education of the children," it said. — Bernama