LIAM Proposal For 2013 Budget

The Life Insurance Association of Malaysia (LIAM) has proposed the government give a separate tax relief of RM6,000 on insurance premiums alone in Budget 2013. In a statement today, LIAM said currently, a yearly tax relief of RM6,000 was given on the aggregate of insurance premiums and Employees Provident Fund (EPF) contributions.

Its president, Vincent Kwo, said the amount has remained constant for a number of years. "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. Kwo said this would put more money back into the pocket of the rakyat to relieve them of their financial burden and also to encourage them to have a better financial plan for the future.

On the medical and education insurance, he said, with rising medical costs, the current tax relief of RM3,000 was insufficient to cater the needs of a typical family. "We hope that this can be increased to RM6,000," he said. He said with the ageing population and rising costs, a private pension scheme was required to supplement the income for the current generation who would retire in future years.

"For private pension schemes to take off, as evidenced from other overseas markets, we believe the government will need to provide tax incentives to pension scheme contributors," he said. Kwo hoped that government would extend the current tax relief of 10 years and remove the eight per cent tax on the annuity fund to be similar to the private retirement scheme, which was tax-free.

He said while other similar investment vehicles, such as unit trusts, were exempted from paying tax on investment income, this was not the case for the rakyat's investment income in the life insurance fund."Currently, investment income in the life insurance fund is taxed at eight per cent. This is not benefiting the policyholders. We look forward to the removal of the tax in this category,"