As the annual tax season rolls around, many Malaysians scramble to gather receipts and calculate allowable deductions to lighten their tax burden. But did you know that several insurance policies qualify for income tax relief in Malaysia?
Whether you’re looking to make smarter financial decisions or claim what’s rightfully yours, here’s a breakdown of insurance-related tax reliefs under the Lembaga Hasil Dalam Negeri (LHDN) guidelines for your annual tax filing.
1. Life Insurance & EPF (Up to RM7,000 Combined)
If you’re a Malaysian with a life insurance policy AND contributing to EPF (Employees Provident Fund), you’re entitled to a combined tax relief of RM7,000.
What’s eligible:
- Life insurance premiums (personal and spouse)
- EPF mandatory and voluntary contributions
- Takaful life plans
- Deferred annuity schemes
💡 Note: Civil servants under the pension scheme (who don’t contribute to EPF) can claim up to RM3,000 for life insurance alone.
2. Education & Medical Insurance (Up to RM3,000)
You can also enjoy RM3,000 tax relief on insurance premiums for policies that cover:
- Your child’s education
- Medical treatment or critical illness
- Hospitalisation and surgical plans
This applies to both conventional insurance and takaful policies.
💡 Keep all payment receipts from your insurance company as proof during e-filing.
3. SOCSO Contribution (Up to RM350)
If you’re employed, your SOCSO (PERKESO) contributions are automatically eligible for a separate RM350 tax relief.
This includes contributions to the:
- Employment Injury Scheme
- Invalidity Scheme
- Self-Employment Social Security Scheme
4. Private Retirement Scheme (PRS) (Up to RM3,000)
If you’ve invested in a Private Retirement Scheme, you can claim up to RM3,000 per year. PRS is a voluntary long-term savings scheme aimed at supplementing your retirement income—plus, it comes with this tax incentive!
5. Lifestyle & Personal Accident Add-ons (Partially Eligible)
While not all general insurance qualifies for tax relief, personal accident insurance and selected riders or add-ons attached to your policies may be claimable under:
- Lifestyle relief (up to RM2,500) – if bundled with a gadget or internet package
- Medical expense relief (under RM10,000 cap) – if related to disease or treatment
Always check with your insurer if the policy is structured to qualify.
Pro Tips for Claiming Insurance Tax Relief
- Ensure your insurance provider is licensed under Bank Negara Malaysia
- Keep your premium payment receipts
- Use the correct categories when filing via LHDN’s e-Filing system
- Consult your insurer or financial advisor to clarify eligibility
Final Thoughts
Insurance is not just a financial safety net—it’s also a smart way to reduce your tax burden. From life insurance to PRS contributions and medical coverage, Malaysians can take advantage of multiple reliefs that directly reward your planning and protection.
