Life insurance is GST exempt from

KUALA LUMPUR: Life insurance is exempt from the Goods and Services Tax (GST), said the Life Insurance Association of Malaysia (LIAM).

This means that policyholders who have purchased or intend to purchase life insurance products such as whole life insurance, endowment insurance, child insurance, term insurance (including mortgage insurance), education insurance and annuity products will not have to pay the 6% GST on their life insurance premiums.

"We wish to highlight that while premiums for investment-linked policies will not attract GST, the fees and charges imposed on these policies such as policy fee will be subject to GST. Similarly non-life riders such as critical illness, medical and health, and personal accident, the premiums will be subject to GST. As a guide, non-life riders are defined as riders which do not cover natural death," LIAM said in a statement.

Despite GST beginning April 1, 2015, policyholders who have purchased non-life riders before April 1, 2015 will be required to pay GST on the applicable portion of insurance premium/fee/charges for insurance coverage from April 1, 2015 onwards.

All LIAM member insurance companies have already notified their policyholders that GST is applicable on non-life insurance and fees on the company's website and have informed policyholders through annual premium notices/separate letter that GST is payable as well as the notification to policyholders to increase the direct debit authorisation limit to cater for GST.

LIAM also advised all policyholders to contact their respective insurance companies to find out the amount of GST that they will have to pay for their medical and health, critical illness and personal accident policies that are due on April 1, 2015 onwards.

For policies paying through direct debit facilities, insurance companies will work with banks to increase the authorisation limit accordingly to include GST. However, policyholders are also advised to contact their respective insurance companies directly to clarify if new authorisation forms need to be submitted to increase the authorisation limit to cater for GST payable to ensure premiums are successfully deducted and to keep their insurance policy status in-force.