(Issued by the President of Life lnsurance Association of Malaysia, Mr Toi See Jong, in conjunction with the tabling of Budget 2017 by the Prime Minister scheduled for Friday, 21 October 2016)

 

Kuala Lumpur, 14 October 2016: In conjunction with the tabling of the 2017 Budget by the Prime Minister, YAB Dato Seri Mohd Najib Tun Razak, LIAM wishes to reiterate our wish list in promoting financial planning and increasing awareness among the Rakyat on the importance of financial protection as we move towards a developed country by 2020.

 

Managing Healthcare Cost

 

As the country transforms into a high-income and developed nation, the demand for better healthcare will grow stronger. This, coupled with improvement in longevity and advancement in medical technology, will further drive up the healthcare cost of the country.  This medical inflation will be a burden to the Government if the Rakyat continue to rely heavily on Government’s funding.

 

It is important that Malaysians start to embark on financial planning for their families.

 

Currently, there is a tax relief of RM3,000 for premiums paid for medical and education policies.

 

However, this amount is insufficient to cater to both healthcare and education.

 

The cost of medical insurance itself for an average family (2 adults and 3 children) is around RM2,500 per annum at the lower end. This leaves only about RM500 per annum premium for savings towards the education of the 3 children in this typical family.

 

As such, LIAM would like to propose that the current tax relief of RM3,000 be increased to RM6,000 for medical and education insurance.

 

Enhancing Well-Being of the Rakyat by improving the Insurance Penetration Rate across All Income Groups including the B40

 

Under the Economic Transformation Programme (ETP), the Government has targeted to insure at least 75% of Malaysians by year 2020. Currently, about 56% of Malaysian has some form of insurance and takaful cover.

 

To encourage more Malaysians to purchase insurance and takaful policies, LIAM propose that the current combined tax relief of RM6,000 for EPF and Life Insurance be separated.  This is because savings in EPF is to meet retirement needs which is in the future. However, life insurance will meet the immediate needs of the family when the breadwinner passes away. Therefore, it would benefit the rakyat if they have RM6,000 tax relief for EPF contributions and another RM6,000 tax relief for life insurance or takaful premiums.

 

For the B40 households, LIAM propose that the Government provide a RM1 to RM1 match for these families to purchase micro insurance policies.

 

Conclusion

 

Moving forward, the life insurance industry continues to play an important role in financial protection, financial accumulation and healthcare funding as Malaysia progresses towards a developed nation. 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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