The Life Insurance Association of Malaysia (LIAM) has called on Malaysia’s government to provide more incentives in the 2015 budget to promote financial planning among Malaysians.

Vincent Kwo, president of LIAM, explained that the current taxation system provides a RM6,000 tax deduction on combined Employees Provident Fund (EPF) contributions and life insurance premiums.

However, Kwo said: "It is noted that the MYR6,000 ($1,841) tax deduction has not been revised for many years and has hence suffered inflation erosion. The last revision was in tax assessment year 2005 when the amount was increased from RM5,000 ($1,534) to RM6,000 ($1,841)."

The current tax incentive system in Malaysia also does not differentiate between savings and protection, according to LIAM.
To address the situation, LIAM has proposed that a tax deduction be made separately available for EPF contributions and life insurance premiums, i.e. RM6,000 ($1,841) tax relief for EPF contributions and a separate RM6,000 ($1,841) for life insurance premiums.

LIAM has also proposed that the tax relief for medical and education insurance premiums to be increased from the current RM3,000 ($921) to RM6,000 ($1,841) as it says the current amount of tax relief is insufficient in most circumstances.

Kwo said: "The life insurance industry plays a very important role in financial protection, financial accumulation and healthcare funding. With proper advanced planning and the right tax structure, the private sector and the rakyat (people) 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 as our country progresses towards a developed nation."

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