Malaysia Life Association Calls for Government Help to Boost Lift Insurance Penetration

The Life Insurance Association of Malaysia has asked the government to provide more incentives for insurance purchases and to set up a private pension scheme in Malaysia.

Life protection is "inadequate" in Malaysia compared with many developed countries, said LIAM in a statement. Currently, only 41% of the population has life insurance, education, retirement savings, medical and health protection. The remaining 59% of the population does not have any form of insurance protection.

Life insurance penetration in Malaysia was 2.8% of gross domestic product in 2008, according to Swiss Re's [85009] annual sigma report on world insurance. The country's total insurance penetration stood at 4.3%, with nonlife insurance at 1.5%.

"After retirement, a wage earner must ensure that there is sufficient savings to last another 20 to 30 years. Relying on employees provident fund savings alone is insufficient," said the association.

In Malaysia, about 25% of the working population are self employed and may not have any retirement savings. The association said "there is a need to fill up the retirement income gap" with the establishment of a private pension scheme.

In promoting life insurance protection, LIAM said it hopes the government would provide tax relief of 6,000 ringgit (US $1,779) for life insurance premiums.

The personal tax relief of 6,000 ringgit is now combined with the statutory employees provident fund contribution. The association said this combined level is "grossly inadequate" in the view of upward economic and salary trends in Malaysia.