Hello Grasshoppa,
Each year, I will be doing a review on my personal finance & investments to check if it is healthy & in line with my retirement journey. Aside from that, I will be doing a yearly review to check on what can I do to maximise my income tax relief. Tax relief is a way for us to legally reduce our taxable income to be paid to our government. Each year, our government will be introducing their yearly budget & part of the topic will be on income tax relief. In other words, you have to spend or have a certain type of commitment for you to enjoy income tax relief.
Many years ago, my insurance agent mentioned on how can I use my life & medical insurance to maximise my income tax relief but it only hit me recently when I did my yearly personal finance health check. The reason being is I have been paying a high amount of income tax for over 2 years & not maximizing it means that I am not able to claim back the amount of tax I paid to the government. Spending extra to maximise my income tax relief also means that I have to spend more money but at the same time, I can benefit from it which is having better insurance & medical card coverage.
Since a friend of mine started her journey as an insurance agent in Great Eastern, I decided to consult her on this. Before upgrading my insurance & medical plan, I was paying RM200 a month for life, critical illness & medical card. To be honest, it was a good plan that I got many years ago but I was not able to maximise on my income tax relief. After going through my insurance plan, I found that I have a gap of RM2200 for life insurance & RM1400 gap for medical insurance which was underutilized for my income tax relief. My understanding is, a medical insurance claim can only be claimed once if I got admitted in the hospital for any illness or injury but for life insurance, my nominees can claim from all my available life insurance policy.
Upon understanding that, I have decided to upgrade my medical insurance with better benefits & my commitment to the existing insurance policy under Prudential have increased from RM200 to RM310 a month. The life & critical illnesses benefit remains the same but the adjustment was done purely on my medical insurance. Next, I made a new purchase for life insurance under my friend who is a Great Eastern Insurance Agent. My monthly commitment to my new life insurance policy cost RM285 a month. In total, I am paying RM310 for my existing Prudential Life & Medical Insurance & RM285 for my Life Insurance with Great Eastern. That is RM595 a month for 2021 vs RM200 that I’ve been paying for the past few years.
My commitment has increased for my insurance but aside from getting better coverage for life & medical insurance, I am also able to get income tax relief under life & medical insurance. Current year assessment for income tax relief for both life insurance & medical insurance is at RM3000 each. It is a good benefit that I am able to get for myself & my nominee if there is something unfortunate that may happen for my future. As what insurance company always say, it is important to be protected in all ways for a better future for you & your family. I agree with this statement & I believe that you should look into this as well as insurance is important for you & your family.
OSS!
