Budget 2026 Wish List – LIAM’s Proposals to Promote Financial Inclusion and Protection for All Malaysians

KUALA LUMPUR, Oct 7 (Bernama) -- With the upcoming tabling of Malaysia’s 2026 Budget by the Minister of Finance, YAB Dato’ Seri Anwar Ibrahim, the Life Insurance Association of Malaysia (LIAM) is pleased to present two proposals aimed at strengthening financial inclusion and raising awareness of the importance of financial protection among Malaysians.
 
Our recommendations focus on enhancing healthcare coverage and well-being, encouraging proactive financial planning, and expanding insurance protection for the general public as well as employees across the country.
 
Proposal 1: Increase Combined Tax Relief for Education, Medical, and Health Insurance from RM4,000 to RM6,000.
 
Currently, taxpayers enjoy a maximum of RM4,000 tax relief on premiums paid for medical and education insurance combined. This amount is insufficient in most cases.  
 
For example, medical insurance for an average family of two adults and three children costs above RM3,000 per annum at the lower end. Hence, there is no savings for premium per annum for this family to support the education policy of the three children, which is not enough.
 
Given the importance of health insurance for Malaysians, the tax relief for this type of insurance plan should be increased to RM6,000.  This adjustment will:
• Ease financial burden of rising medical costs on families;
• Encourage taxpayers to invest in long-term healthcare planning.
 
This increase is necessary to ease the financial burden on taxpayers caused by the rising costs of medical care. 
 
According to AON’s Global Medical Trend Rates Report, Malaysia’s medical cost inflation surged to 12.6% in 2023, far exceeding the global average of 9.2%, and ranking among the highest in the Asia-Pacific region. Medical costs typically escalate with age, and many taxpayers are relying on their current income to fund future longterm healthcare expenses. AON’s forecasts Malaysia’s medical inflation to reach 15% in 2025, higher than global’s average of 10%.
 
The life insurance industry continues to play a critical role in helping Malaysians plan for their protection needs—whether in healthcare, medical coverage, or education for their children. In 2024 alone, the life insurance sector disbursed RM16.8 billion in benefit payouts, of which RM8.9 billion were for medical insurance claims. These figures highlight the vital role of medical insurance in managing healthcare costs for policyholders.
 
Proposal 2: Waive 8% Service Tax on Group Employee Insurance Scheme
 
Based on published statistics, less than half of the workers are covered under the group insurance scheme, leaving a significant protection gap. This gap is especially concerning for lower income groups, including the B40, who may not be able to afford personal insurance.  
 
To address this, LIAM proposes a waiver of the 8% service tax on group employee insurance schemes.  This will:
i. Encourage more employers to provide group insurance benefits particularly for employees unable to purchase personal coverage;
ii. Reduce business operating costs, especially for small and medium enterprises, and subsequently incentivize them to maintain employee insurance coverage;  
iii. Ease the pressure on the public healthcare system, as insured employees often seek treatment in private facilities.
 
The proposed tax exemption will greatly benefit workers, employers, and the national economy, while also contributing to the increase in insurance coverage rates among Malaysians.
 
Conclusion
 
The life insurance industry is committed to supporting the well-being of Malaysians through financial protection, healthcare funding, and long-term savings. With the right policies and incentives, the private sector can complement the Government in sharing the socio-economic costs of protecting the Rakyat.
 
LIAM believes that adopting these two proposals under Budget 2026 will significantly enhance financial inclusion, improve penetration rate and contribute to a more sustainable and resilient economy for Malaysia.
 
About LIAM
 
Formed in 1974, the Life Insurance Association of Malaysia (LIAM) is a trade association registered under the Societies Act 1966. LIAM has a total of 16 members, of which 14 are life insurance companies and 2 life reinsurance companies.
 
LIAM’s objectives are to promote a progressive life insurance industry; to enhance public understanding and appreciation for life insurance; to upgrade the image and professionalism of the life insurance industry and to support the regulatory authorities in developing a strong industry.
 
(Issued by the Chief Executive Officer of Life Insurance Association of Malaysia, Mr Mark O’Dell in conjunction with the tabling of Budget 2026 by the Minister of Finance
Malaysia, YAB Dato’ Seri Anwar Ibrahim, scheduled on Friday, 10 October 2025)
 
SOURCE: Life Insurance Association of Malaysia (LIAM)
 
FOR MORE INFORMATION, PLEASE CONTACT
Name: Puan Norizan Hassan
Head of Corporate Communications
Life Insurance Association of Malaysia
Tel: 603-26916628/6168
Email: liaminfo@liam.org.my 
Website: www.liam.org.my  
Facebook: LIAM – Life Insurance Association of Malaysia
 
--BERNAMA