No GST for life insurance

KUALA LUMPUR: Life insurance is not subject to the 6% Goods and Services Tax (GST), Life Insurance Association of Malaysia (LIAM) said.

This also includes endowment insurance, child insurance, term insurance (including mortgage insurance) and education insurance.

“While premiums for investment-linked policies will not be subjected to GST, the fees and charges imposed on these policies such as policy fee will be subject to GST,” the association said in statement.

“Similarly the premium for non-life riders such as critical illness, medical, health, and personal accident will be subject to GST. As a guide, non-life riders are defined as riders which do not cover natural death.”

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

Insurance companies under LIAM have already notified their policyholders that GST is applicable on non-life insurance and fees on the company’s website and through annual notices.

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 from April 1 onwards.

For policies paid through direct debit facilities, insurance companies will work with banks to increase the authorization limit accordingly to include GST..