The Malaysian government has proposed increasing the individual income tax relief for medical expenses up to MYR10,000 ($2,318), which also covers medical and health insurance plans with co-payment features.
The government has also proposed an increase in individual income tax relief on education insurance and medical and health insurance premiums from MYR3,000 to MYR4,000.
These measures were disclosed when the 2025 Budget was tabled by Prime Minister and Minister of Finance, Mr Anwar bin Ibrahim, last week.
The Life Insurance Association of Malaysia (LIAM) congratulated the government for tabling a “caring 2025 Budget, prioritising the needs and welfare of the people”.
LIAM president, Mr Raymond Lew, said in a statement, “We fully support the government’s efforts in promoting financial inclusion, raising awareness on the importance of financial protection, and enhancing healthcare coverage for the rakyat (the people).
“Hence it encourages more proactive planning for protection needs and expanding insurance and medical coverage for both the public and the overall well-being of all Malaysians.”
He added, “By specifically encouraging medical and health insurance with co-payment plans for a family, it will help policyholders manage the cost of medical premiums in the long run and help fund for their future long-term medical needs.”
As for the MYR1,000 increase in tax relief on education insurance and medical and health insurance premiums, he said, “This is a good financial planning incentive to encourage more Malaysians to purchase medical and health insurance plans as well as education policies for their children.”
Social Protection: Perlindungan Tenang Voucher Programme
Mr Lew said that the insurance industry would also like to applaud the government’s commitment to continuing the Perlindungan Tenang Voucher Programme (national inclusive insurance initiative) in collaboration with Bank Negara Malaysia and the insurance and takaful industry. This initiative will benefit up to two million Sumbangan Tunai Rahmah recipients (cash assistance programme for those with the bottom 40% of household incomes (B40) under the Finance Ministry), who are eligible to claim an MYR30 voucher to finance part of the cost of purchasing a Perlindungan Tenang product that offers protection from death, personal accidents, and general risks such as fire and flood.
This incentive is extremely encouraging for the B40 community as Perlindungan Tenang products have been specially developed to incentivise the youth, young families, and B40 household segment to purchase life insurance.
“Perlindungan Tenang insurance plans are affordable, easily accessible and the claims are simple and straightforward. The support from the Government is extremely important to empower the B40 group to take the first step to introduce financial planning in their families,” he added.
Stamp Duty
The government also announced the MYR10 stamp duty rate (maximum of MYR1,000) for the assignment of life insurance policies “based on love and affection”. This will encourage policyholders to assign their policies to their loved ones and give them lifetime security.
Mr Lew said, “With proper advanced planning and the right tax structure, the private sector and the rakyat (the 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 for the nation.”