Q & ACategory: InsuranceTo continue paying current life insurance or get new insurance for income tax relief
Eve Tan asked 4 years ago

Dear KC
I have a life insurance which I bought in year 1998 and  have stop paying since 2015 as the dividend generating is able to sustain the insurance.  I realize there is a tax rebate of RM3000 is given for life insurance for 2019 income tax filing,  therefore would like to know if I should continue paying the existing policy or I should invest in new policy.  I am currently 56 years old and still under employment and will it be beneficial to have a new policy at my age.

1 Answers
KCLau Staff answered 4 years ago

Hi Eve, usually the new policy offer more benefits due to the lower commission and more updated coverage. To benefit from tax relief, which I think your income tax bracket should be high at senior level, it is a wise move. Money in insurance can be withdrawn anytime.

One more thing to consider: the commission period.
For new policy, agent get paid commission for the first 6 years, can be up to 160% of the annual premium loss for the policy holder, to pay for the commission.

If you continue to pay the old policy, there is no more commission for agent. So technically, full amount you pay will be allocated in your policy, which you can take out anytime too.