Insurance Premium Tax Relief in Malaysia (YA 2027): Life, Medical, Education and Takaful

Malaysia’s insurance relief has two different ceilings: RM 3,000 for qualifying life premiums or family takaful and relevant voluntary EPF contributions, and RM 4,000 for education and medical insurance. The amount leaving your bank account is only the starting point, because a bundled policy can contain parts that belong in different categories, or that do not qualify at all.

This guide is for resident individuals claiming premiums paid in 2027, which belong to YA 2027 and are normally reported when you file in 2028. Budget 2027 leaves these premium ceilings alone, but it proposes lower tax rates and a higher basic relief from YA 2027, which changes what each ringgit of relief saves you. If you are filing in 2027 for premiums paid in 2026 (YA 2026), the same ceilings and claim rules apply under current law; only the tax-rate examples differ.

The insurance, EPF and PRS ceilings come from the enacted law and LHDN’s 2026 payroll guidance, and none of them has an end date before YA 2027. The Ministry of Finance’s Budget 2027 tax measures annex does not touch them. The rate cuts used in the examples below are proposals until Parliament passes the Finance Bill and LHDN issues its YA 2027 guidance.

Quick answer: 2027 insurance relief caps

The life insurance and Employees Provident Fund (EPF) relief combines two allocated limits, so the RM 7,000 total is not all available for ordinary life premiums. The table sets out these limits alongside the other categories that sit next to them on your tax return.

Source: LHDN 2026 MTD specification, 2026 TP1 notes, MOF Budget 2027 tax measures, Appendix 9 (as of 2 November 2026)

EPF confirms the RM 4,000 contribution component and RM 3,000 life insurance or voluntary contribution component. Apply each ceiling to the payments that belong in it. Compulsory EPF contributions above RM 4,000 stay compulsory, even if you have room left in the other component.

A relief reduces the income used to calculate your tax. It is not a refund of the premium, and how much tax you save depends on your own tax band. For example, RM 1,000 of relief that falls entirely in the YA 2027 18% band (RM 70,001 to RM 100,000) saves RM 180, and in the 24% band (RM 100,001 to RM 150,000) it saves RM 240. Those bands are 19% and 25% for YA 2026.

EPF and life limits allocated separately, with education and medical insurance under their own RM 4,000 cap for YA 2027.

What counts as qualifying life insurance?

Start with the policy contract, the insured person and the eligible amount on the annual tax statement; the product’s marketing name will not tell you all three. Check each one separately, especially if the policy includes savings, investments or several riders.

Ordinary life plans and term life cover

A qualifying life policy can be ordinary life or term life protection. The cover must be for an eligible person, and you must have actually paid the premium. LHDN’s resident individual guidance requires actual payment, so unpaid premiums recorded as a policy debt do not count.

Match the annual statement to your payment history. If an instalment failed, a policy lapsed or the insurer refunded a payment, sort out the difference before using the annual total. A standing instruction shows you meant to pay; the completed transaction and the insurer’s record show what was actually paid.

Investment-linked insurance: only the eligible premium portion

An investment-linked policy bundles several parts into one payment. Ask the insurer to identify the qualifying life amount, the medical amount and any other component, instead of putting the whole payment into whichever field has spare room.

Keep the annual tax certificate with the policy schedule and product disclosure sheet. If the statement does not explain a top-up, rider change or adjustment, ask the insurer for a written clarification. The value of your investment units, and the amount invested, are not insurance relief. Example C below shows how a split works in practice.

Life cover for children (since YA 2026)

Finance Act 2025, Act 874 extends life insurance relief to qualifying children from YA 2026, with no end year, so it carries into YA 2027. Its section 49 child definition covers an unmarried child who is under 18; aged 18 or older in full-time instruction at a university, college, school or similar establishment; serving under articles or indentures towards a trade or profession; or physically or mentally disabled under written law.

The definition includes legitimate children, stepchildren and legally adopted children of you or your spouse. Its full-time education wording is wider than the "tertiary education" shorthand in the payroll specification. Keep the relevant birth, adoption, education, training or disability evidence. The expansion adds eligible people to the existing RM 3,000 component; each child does not bring a new limit.

Employer group insurance and employer-paid premiums: where claims fail

Cover your employer provides only counts if you paid the premium yourself. If the employer bears the full cost, leave its group premium out of your own claim. Payroll deductions need a closer look: find out whether they are your contribution to eligible cover, then get the supporting breakdown.

LHDN specifically allows employee-paid premiums for a qualifying group medical policy, which is narrower than every employer insurance arrangement. For a reimbursement, or a life premium treated through payroll as a taxable benefit, ask payroll and LHDN to confirm the treatment before claiming. The EA form on its own will not settle eligibility.

What counts as medical and education insurance?

Medical insurance relief covers qualifying premiums, while medical expense relief covers eligible treatment costs. A hospital bill is not an insurance premium. Education insurance has its own policy conditions too, so a plan sold as saving for university only qualifies if it meets them.

Budget 2027 proposes renaming the medical expenses relief health and well-being, keeping its RM 10,000 ceiling and adding postnatal care. That is the treatment-cost category. Your medical card premium still goes in the RM 4,000 insurance category.

Medical card and standalone health cover

LHDN’s medical policy criteria require treatment cover for disease, accident or disability and a coverage period of at least 12 months. A standalone policy can qualify. The medical card is what you use at the hospital; the premium statement is what supports your tax claim.

Before filing, check that the statement covers the right person and payment period. If the insurer repriced the policy during the year, use the actual eligible annual amount, because multiplying the latest monthly instalment by twelve will be wrong when the year included several prices.

MediAsas: the new base medical plan from January 2027

Budget 2027 announced MediAsas, a voluntary medical insurance and takaful plan launching nationwide in January 2027. It is a standalone plan, not linked to investment products, renewable annually with cover up to age 85. EPF members under 55 can pay its premiums from their Akaun Sejahtera, and smaller employers get a RM 200 first-year premium subsidy per worker.

Premiums are not yet published, and no official guidance yet says how MediAsas premiums are treated for relief. If you pay them yourself and the policy meets LHDN’s medical policy criteria, they would normally fall in the RM 4,000 education and medical category. Premiums paid from EPF savings, or covered by the employer subsidy, are a different matter: ask the provider for the annual tax statement and confirm with LHDN before claiming them.

Medical riders attached to life or investment-linked plans

A qualifying medical rider can sit inside a life or family takaful policy. Claim the eligible rider amount in the medical category only, not again as life cover. The 2026 TP1 notes exclude waiver benefit riders and travel and medical expenses insurance from this deduction.

Critical illness cover depends on how it is structured. The ruling allows the qualifying dreadful disease rider premium, while a package with term life or personal accident cover has a specified 60% medical allocation. Ask the insurer which treatment applies to your policy; the 60% figure is for that specific package type.

Education insurance policies

LHDN sets education policy conditions involving the child beneficiary or nominee, parental payor cover where the child is insured, and maturity timing between ages 13 and 25. For takaful, the parent is the participant and the proceeds must be gifted to the child. Ask the provider to confirm the full conditions and the eligible amount.

Education premiums share the same cap as medical premiums. They are a different claim from SSPN savings, your own course fees or school tuition, so sort each document into the category it supports before adding up totals.

Plans for spouse and qualifying children

Qualifying cover can extend to your spouse and eligible children, within each category’s rules and the statutory child definition. Keep a household schedule showing who paid, who is covered and the statement amount. That is far more reliable than splitting premiums equally because both spouses earn.

The 2026 specification limits the education and medical premium deduction under joint assessment to one RM 4,000 total. Under separate assessment, each spouse claims only what they paid, backed by their own records. The same payment can only appear on one return.

Run through these checks before adding a premium to either category.

Eligibility checklist: who paid, who is covered and which premium component qualifies.

Insurance vs takaful: tax-relief categories

The tax category follows the benefit, so conventional insurance and takaful fall into matching categories even though the policy documents use different terms. Keep the operator’s wording on the certificate you file.

Source: LHDN resident individual ruling, Act 874 child expansion (as of 2 November 2026)

A takaful contribution is not zakat. The two get different tax treatment and need different evidence, so keep any zakat receipt apart from the operator’s contribution certificate.

How to calculate your insurance relief: realistic examples

The examples below use the YA 2027 ceilings and assume every premium was paid in 2027 by an eligible resident claimant for eligible people. In each case, start with the qualifying amounts, apply the category ceiling, then add up the claims. The tax saving then uses the YA 2027 rates.

Example A: salaried employee

Say your compulsory employee EPF contributions total RM 5,000, your qualifying life premium is RM 2,400 and your eligible medical premium is RM 2,800, with no additional voluntary EPF payments.

Example only. Assumes all payments made in 2027 and eligible under the YA 2027 ceilings.

That gives RM 4,000 + RM 2,400 + RM 2,800 = RM 9,200 of relief. The extra RM 1,000 of compulsory EPF cannot move into the life or voluntary EPF component, even though RM 600 of room is left there.

If your chargeable income after all reliefs is RM 85,000, it would have been RM 94,200 without these three claims. Both figures sit in the 18% band, so the claims cut your tax by RM 9,200 × 18% = RM 1,656.

Example B: life premium exceeds the category limit

Now assume qualifying life premiums of RM 4,200 and an eligible EPF component of RM 4,000. The life claim is capped at RM 3,000, so the combined claim is RM 7,000, against the RM 8,200 you paid.

Any voluntary EPF contributions would share that already-full life component. Each contribution counts in one component only, so if voluntary payments help fill the EPF component first, keep a clear record of how you allocated them and what remains.

At a chargeable income of RM 120,000 after reliefs (RM 127,000 without these two), the whole RM 7,000 sits in the 24% band and saves RM 7,000 × 24% = RM 1,680. The RM 1,200 of life premium above the cap saves nothing.

Example C: bundled investment-linked policy

Assume a policy costs RM 300 a month, or RM 3,600 for twelve completed payments. Its annual certificate shows RM 1,200 of eligible life premiums and RM 1,800 of eligible medical premiums. The remaining RM 600 is not certified as eligible for either claim.

Enter RM 1,200 and RM 1,800 in their own schedules, subject to any other payments already using those ceilings. Your own policy’s split will depend on its certificate, even if it costs the same each month.

When a claim crosses a band boundary, split the saving by band. Say your chargeable income is RM 69,000 after this RM 3,000 claim, so RM 72,000 without it. The first RM 2,000 removed would have been taxed at 18% and the next RM 1,000 at 11%: RM 360 + RM 110 = RM 470, slightly less than RM 3,000 × 18% = RM 540.

Example bundled policy: RM 3,600 a year split into RM 1,200 life, RM 1,800 medical and RM 600 not eligible.

Documents needed to claim insurance premiums

Keep one folder for the payment year, with a short worksheet showing how you reached each claim. It should let you trace every total on the return back to a statement and a payment years later. Save downloaded files somewhere you control, not only in an employer or agent portal.

LHDN has asked taxpayers to request an e-invoice for every purchase linked to a personal relief, giving the seller their MyKad number or TIN. Its pilot may pre-fill YA 2026 returns from that data, with insurance among the possible categories. LHDN has not yet said whether pre-filling extends to YA 2027, so keep asking for e-invoices on 2027 premiums. A pre-filled amount still needs checking against the insurer's annual statement, especially for policies that mix life, medical and other components.

Collect the annual premium or contribution tax statement, policy schedule, receipts or payment confirmations, evidence of your relationship to the insured person, and any written clarification of eligible components. Add your EPF statement and EA form to reconcile payroll figures. For child cover, keep evidence of the child’s statutory status.

HASiL’s practical guidance is to keep records for seven years from the end of the year the return is furnished. For a YA 2027 return filed in 2028, keeping them until the end of 2035 is a safe target. Keep the calculation worksheet too, including any amounts you left out and why.

A simple worksheet like the one below helps you reconcile documents and spot duplicates.

Insurance claim worksheet for 2027 premiums, for reconciling documents and avoiding duplicate entries.

How to enter life and medical insurance in MyTax e-Filing

The YA 2027 return opens in the 2028 filing season, and LHDN has not published that filing programme or the YA 2027 forms yet. For reference, the 2026 programme set 30 April for e-BE and 30 June for e-B, with 15 days' grace for e-filing. LHDN normally publishes each year's programme early in the year, so confirm the 2028 dates then. Its e-Filing Made Easy 2026 guide covers the YA 2025 filing cycle, and later screens may differ.

1. Open the YA 2027 return when it becomes available in the 2028 filing cycle, choosing the form that fits your income and circumstances.
2. Reconcile the annual statements with your worksheet, and resolve any differences before entering the claim.
3. Find the EPF and life contribution fields and follow the allocation instructions. Check any prefilled figures against your own records.
4. Enter your qualifying education and medical insurance total in its own field, after applying the shared ceiling.
5. Review the whole return, then save the acknowledgement, your calculation and the supporting statements.

A premium already reflected in your payroll tax deductions still goes into the annual return. Monthly Tax Deduction (PCB or MTD) is tax withheld from your salary, so enter the premium once, from the insurer certificate.

Common claim mistakes and penalties

Most avoidable errors come from shortcuts: multiplying the latest monthly premium by twelve, copying last year’s total, or both spouses claiming the same payment. Compare your final worksheet with the original records, and query any difference you cannot explain before filing.

Watch for cover that does not qualify, the wrong insured-person relationship and riders counted as extra categories. If you paid several years in advance, ask the insurer for its annual tax allocation and claim each year’s share once. Do the same if a premium was refunded or paid from the policy’s value instead of with new money.

An excessive claim can change your tax assessment, and any penalty depends on the legal provision and your circumstances. If you find an error after submitting, contact LHDN about correcting it and keep a record of the amended calculation.

What Budget 2027 changes around insurance relief

The Budget 2027 tax measures annex leaves the life, EPF, education and medical insurance and PRS ceilings as they are. The changes that sit next to them on the return are:

Source: MOF Budget 2027 tax measures, Appendices 1, 2, 4 and 9, LHDN 2026 MTD specification (as of 2 November 2026)

The extra RM 150 covers voluntary LINDUNG 24 Jam contributions and LINDUNG KENDIRI contributions in the 17 sectors where it isn't compulsory. Keep the PERKESO statement for it, apart from your insurer certificates. PRS relief was extended by Budget 2025 to YA 2030, so it also continues.

FAQs

How much life insurance tax relief can I claim in Malaysia?

Up to RM 3,000 for YA 2027, shared between qualifying life premiums, family takaful and relevant voluntary EPF contributions. You can only claim what you actually paid on eligible cover.

Is life insurance relief RM 3,000 or RM 7,000?

RM 3,000 for life cover. The RM 7,000 figure adds the separate RM 4,000 component for EPF or approved contributions, which compulsory EPF contributions may already fill.

Did Budget 2027 change insurance premium relief?

No. The proposals raise basic relief to RM 12,000 and cut the 19% and 25% bands to 18% and 24% from YA 2027, but the insurance, EPF and PRS ceilings stay the same. The rate changes still need to pass in the Finance Bill.

Can I claim a medical card in YA 2027?

Yes. Eligible premiums for qualifying medical cover count towards the shared RM 4,000 education and medical insurance ceiling. Claim the amount on the premium certificate, not the card’s benefit limit or the cost of treatment you received.

Can I claim investment-linked insurance premiums?

Yes, but only the eligible components your insurer identifies. Put each component in its own category, and claim a medical rider in the medical category only.

Can I claim life coverage for my child?

Yes, for a child who meets the statutory definition above. This has applied since YA 2026. Keep evidence of the relationship and the child’s age, full-time study, training or disability. The premium counts towards your existing RM 3,000 life component.

Are takaful premiums eligible for the same relief categories?

Yes. Qualifying family, medical and education takaful fall into the matching categories. Get the operator’s contribution tax certificate and check the covered person and qualifying amount, as you would for conventional cover.

Can both spouses claim the same insurance premium?

No. Each payment goes on one return. Under separate assessment, each spouse claims their own eligible payments, and under joint assessment the education and medical ceiling stays at RM 4,000.

Is company-paid medical insurance tax deductible for employees?

Not if your employer pays the whole premium. If you pay an eligible group medical contribution through payroll, keep evidence of your share, and ask for guidance if reimbursements or taxable benefits are involved.

Does critical illness insurance qualify?

It can, depending on how the policy is structured. LHDN treats dreadful disease riders differently from packages with term life or personal accident cover, so ask your insurer for the tax breakdown.

Can I claim insurance premiums with no receipts?

You need records showing the payment and the qualifying amount. Ask your insurer for replacement receipts or the annual tax statement, and match it to your payment records instead of entering an estimate.

Where do I find the annual tax statement?

Check your insurer or takaful operator’s app, customer portal or policy service team. For example, AIA confirms that premium and contribution statements are available through its customer account, and its current announcements refer to downloading statements in AIA+. Select the right year and save the file.

Is PRS included in the life insurance limit?

No. Eligible Private Retirement Scheme contributions and deferred annuity premiums have their own RM 3,000 category, which runs to YA 2030. Other retirement investments do not count as PRS.

Getting your 2027 claim ready

Set up a 2027 folder now, ask for e-invoices when you pay premiums, and download each insurer's annual certificate early in 2028. Check the people covered and the payments made, sort each amount into its category, and confirm the YA 2027 rates and filing dates once the Finance Act and LHDN's 2028 programme are out.