Be careful when reporting insurance on your personal income tax return! Remember to report life insurance and medical insurance separately.
According to the Inland Revenue Department (LHDN) list of tax deductions, life insurance and medical insurance are different tax deductions. Life insurance is eligible for a tax deduction of up to RM3000 while medical insurance and education insurance are also eligible for a tax deduction of up to RM3000 under the same program.
If you have an investment-linked policy, you must report your life insurance and medical insurance separately on your tax return. An investment-linked policy is one in which the insured pays a single premium for a variety of benefits, such as life insurance, 36 illnesses, permanent disability, and a medical card. The premium of the investment-linked policy will be divided into two parts, the premium of the insurance and a part of it will go into a trust fund.
Example.
The insurance policy purchased by Hana is an investment-linked insurance policy with an annual premium of RM3000. Hana cannot deduct RM3000 directly from her life insurance tax deduction when filing her tax return, nor can she deduct RM3000 directly from her medical insurance because the insurance policy she purchased is divided into life and medical insurance.
You must check your Premium Paid Statement, which will clearly state your share of life insurance and medical insurance. This is the only way for Hana to know how much tax deduction she can get for each item.
In this policy, RM422.15 belongs to life insurance, RM2254.38 belongs to medical insurance, RM187.87 belongs to medical or life insurance, and RM135.60 belongs to other.
It is worth to pay special attention to the third part of RM187.87, in this part 60% can be used for tax deduction of medical insurance and 100% can be used for tax deduction of life insurance.
