Can you simply claim tax relief for a "so-called" education plan?
Child education policy
Under the guidelines provided by the Inland Revenue Board (Circular No. 4/98), various criteria must be met by an education insurance to enjoy tax deduction, which are:
1) The beneficiary of the insurance must be the child, while the life assured can either be the parent or the child.
2) In the case the parent is the life assured, the nominee must be the child.
3) If the life assured is the child, the following conditions must be fulfilled:
a. A payer benefit rider on the payer’s life with the same duration as the basic insurance must be attached. In the event the payer (parent) passed away and/or is totally and permanently disabled, all future premiums will be waived.
b. The premium of payer benefit rider, whether is in addition to the basic premium or is bundled with the basic insurance, which is a single premium, will qualify for tax deduction.
c. If the payer of the education insurance does not qualify for the payer benefit rider, which means no payer benefit rider can be attached to the basic insurance, the premium paid for the basic insurance is NOT entitled to claim for a deduction.
4) For a takaful education insurance, the matured amount must be made a ‘hibah’ or gift to the child by the participant (parent).
5) For both conventional and takaful education insurance, the matured amount must be scheduled to take place when the child is between 13 and 25 years of age.