The National Association of Malaysian Life Insurance and Family Takaful Advisers (Namlifa) is urging the Government to abolish the goods and sales tax (GST) imposed on medical insurance.
Namlifa president James Bong said the move was necessary to prevent the elderly from lapsing on the premium payments for their medical insurance.
“As they grow older, the amount of their premium increases and so does the 6% GST imposed.
“This becomes a big burden and many will discontinue their medical insurance,” said Bong.
The only way to help senior citizens would be for the Government to scrap GST on all medical insurance, he added.
Under the current framework, premium on standalone medical cards increases every five years and can become a significant amount by the time a person retires.
Meanwhile, life insurance agents are also urging the Government to draft a framework to prevent life policies from lapsing.
MCIS agency manager Gunaraj George said when these policies lapse, the insurance agents would be held responsible and some were even terminated when a certain percentage of their policies lapsed.
“If an agent fails to keep 70% to 80% of policies active, he faces the sack.
“This is unfair and we hope the relevant bodies would do away with such controls,” he added.
He said when an insurance agent loses his job, he also loses all his commissions in entirety.
According to Gunaraj, currently there is an increase in the number of policy lapses among the B40 group which earns RM3,000 and less a month.
Gunaraj added that more than 600,000 life insurance policies were surrendered in 2016.
Namlifa’s Bong said the only way to overcome this problem is to strictly sell the needs of the potential insurer as opposed to selling the products formulated by the insurance companies.
He said the agents must also work out an affordable budget so that their clients would be able to continue paying the premiums without a hitch.
“Since the policyholder would generally know the consequences if he discontinues paying, would he allow the policy to lapse if he had a choice?
“No one wants to die for free,” said Bong.