FIN533

PERSONAL FINANCIAL PLANNING

TITLE:

INSURANCE PLANNING AND TAXATION

Prepared by:

Name Class Student’s ID

AIZUDDIN SHAH B ABDUL HAKIM BA2423B 2021899222
MUHAMMAD HAFIZ BIN AHMAD KAMAL BA2423B 2021604064
NURUL HUDA BINTI HAZARIN BA2423B 2021885706
FATHIN ARISSA BT MOHD FADLI BA2423B 2021899156

Prepared for:

PUAN ZUNAIDAH BINTI ABD HASAN

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 ACKNOWLEDGEMENT

‫بسم هللا الرحمن الرحيم‬

First and foremost, we would like to express our infinite gratitude to Allah S.W.T,
Most Gracious and the Most Forgiving for allowing us to successfully complete the
assessment our lecturer assigned. Secondly, we would like to express our gratitude to our
lecturer for this subject and for giving us the chance to be part of her students. We have
gained a lot of knowledge about financial planning from this particular subject, and it will be
helpful for us to put that information in mere future when we get the chance to be a financial
planner one day. Last but not least, we would like to express our gratitude to everyone that
involved directly and indirectly in helping us finish this assessment. Even though were quite
overwhelmed by other subjects' assessments, we finally have the courage to complete this
assignment because of the support and encouragement that we received from each other and
everyone surrounding us, such as family members and friends.

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 SUMMARY

This report contains the importance of insurance planning and tax planning. Under
this report, we will discuss the importance and current issue in insurance planning and tax
planning as well. Apart from that, we will also discuss the statistical information and any
other related issues that we found while working on this report.

Recently, Covid-19 has made us aware of how important insurance is in our daily life.
Insurance is not only about life insurance, but it is also related to our medical protection,
critical illness protection, savings and investment plus protection in case an accident
happened to the insurance holder. Having insurance is something we cannot delay for too
long as we normal human being is not knowing when or where will the calamity hit us.
Moreover, insurance is not just being used whenever we face with difficulties, but it is also a
way for us to invest in our forthcoming.

Other than that, tax planning is surely a thing that many will overlook and not take an
account about it since as long as he or she works, the tax needed to be paid eventually.
However, creating one or two blueprints for this financial element is not unworthy at all. It is
due to the fact that the sum of taxes paid by some individuals could be able to consummate
up to a considerable value that can actually be saved through proper planning. Even though
taxes are a matter that every working taxpayer needs to do, the tally they need to pay is not
necessarily high as what they are paying presently. In fact, proper paperwork could benefit
not just some random individuals, yet all current taxpayers also could favour from it.

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 Table Of Contents:
Item Page
Introduction 5
Importance 6
Current Issues 7
Statistical Information 11
Conclusion 12
Recommendation 13
References 16
Appendices 17

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1.0 INTRODUCTION

5
2.0 IMPORTANCE

6
3.0 CURRENT ISSUES

3.1 Insurance Planning Current Issue

As Covid-19 appear globally, it had created awareness of the need for people
to start registering their personal insurance protection. Based on the research
done by Zurich Malaysia, the insurer added that affordability was the main
reason for not having protection. It also stated that the pandemic had affected
their ability to afford insurance or takaful. One of the issues of insurance
planning is how to ensure people have adequate protection for them to sustain
their way of life.

Most policyholders do not have insurance that will cover business interruption
losses due to COVID-19 firm closures, according to insurers and their
associations worldwide. Business interruption insurance is usually offered as
an add-on to commercial property insurance and is typically only triggered in
cases of physical property loss. Specific insurance policies have been
developed to provide a detailed range of business interruption losses
experienced because of an infectious disease outbreak, either as a stand-alone
specialist policy or as an endorsement of a policyholder's current business
interruption coverage. Additionally, some scope for non-damage business
interruption has been designed to cover any disruption of operations that does
not result in physical damage to the insured premises or a building nearby
non-damage business interruption insurance, however, continues to be a niche
product with little adoption.

Even though buying life insurance is crucial as a vital protection strategy, the
Life Insurance Association of Malaysia estimated that 7.8 million working
adults—out of 16 million—do not have coverage. The government is under
further pressure to provide healthcare aid due to the rise in COVID-19 cases
over the previous few months and Malaysia's low life insurance penetration
rate. Of the 1,201 respondents, 62% claimed that the epidemic had made it
more difficult for them to pay insurance or takaful. Approximately 23% of
Malaysians, or nearly one in every four, cannot afford personal protection.

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Government orders to close businesses or limit activity to slow the virus'
spread among staff and consumers have resulted in a significant drop in
revenue for companies worldwide. Due to COVID-19's considerable effects,
most governments have implemented programs to guarantee the availability of
money for firms or income for their employees to assist such sectors. In
addition, some commercial property insurance policies cover business
interruption losses, which offers policyholders protection against some of the
losses they suffer when their business is forced to close, according to the terms
and conditions of the specific policy.

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3.2 Taxation Current Issue

With the shifting investment environment brought on by COVID-19,

Malaysia's tax system needs to remain modern and viable to draw fresh
domestic and international direct investments into the nation. However, there
are indications of a recovery for the Malaysian economy with more businesses
reopening, thus, providing current and sustainable tax incentives that will
undoubtedly calm the fears of foreign investors.

Developing countries face significant challenges when establishing efficient

tax structures. In these countries, agriculture and small, unofficial companies
employ most of the population. Rarely do they get fixed, dependable pay. As a
result, their revenue varies, most of which is earned "off the books" in cash.
The base for income tax is tough to ascertain. Additionally, workers in these
countries are less likely to spend their salaries at large stores that keep
meticulous sales and inventory records. As a result, the economies of these
countries are less affected by the government's current revenue-generating
strategies, such as income and consumption taxes, and the government finds it
challenging to impose high tax rates.

Next, a former governor of Bank Negara Malaysia (BNM) has asked the
government to re-evaluate its current taxation structure to create a more
inclusive and equal system. Value-added tax should be a part of a fair tax
system, but it should not become a political issue. This was done to ensure
Malaysia has options for income and prevent it from falling into a debt trap in
the long run. Furthermore, although the nation's debt level was still relatively
low at 50% to 60%, compared to Japan and some other countries with over
100%, this was still significant. He predicted that the debt trap would not only
slow economic expansion but also have an impact on the bond and equities
markets.

Additionally, it is claimed that the debt trap would not only limit economic
expansion but also impact the equities and bond markets, eroding investor
confidence in Malaysia. Currently, due to the structure of the tax system,
around 30% of the economy does not pay taxes. This includes retired

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individuals and others who can still afford to spend money and should do their
share to help maintain good roads, airports, and educational facilities.

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4.0 STATISTICAL INFORMATION

Based on the chart above, we can see estimates of the monthly impact of confinement
measures on business revenues (USD billion) FINANCE AND INSURANCE
INDUSTRIES in 2020. As we can see United States has the highest revenues in 2020
which is as much as RM 40 billion. This shows that most Americans buy insurance as
protection during covid-19. on the other hand, Italy, get a low tax revenue of RM 5
Billion. this happened because Italy is the country with the highest number of covid-
19 cases and caused closures and restrictions in the country which caused many
financial and insurance industries to not operate.

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 Based on the chart above, we can see TAX REVENUE (%) GDP in 2020. As we can
see Italy has the highest tax revenue in 2020 which is as much as 24.7682%. This
shows that Italy generates increased revenue for the government but often at the
expense of economic growth and mobility for taxpayers. on the other hand, for the
United States, get a low tax revenue of 9.861611558%.

5.0 CONCLUSION

To conclude, a lot of the problems insurers are currently encountering seem to be

connected to digital technologies. They do, however, also offer the appropriate
answers. Insurance companies of all shapes and sizes are using digital platforms to
modernise their back-end functions and product offerings, which ultimately helps
them boost client happiness and income.

Additionally, the COVID-19 situation is projected to have a large negative impact on

tax receipts in 2020, particularly from consumption taxes, as a result of the dramatic
decline in economic activity and consumption that followed lockdowns and the
forcible closure of numerous firms. New research in Revenue Statistics, which is
informed by the lessons learned from the 2008 global financial crisis, demonstrates
that increases in government expenditure and household consumption of necessities
will worsen this decline in the short- to medium term.

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6.0 RECOMMENDATION

6.1 Taxation

Offering electronic filing and payment

If properly implemented and used by the majority of taxpayers, an electronic

system for filing and paying taxes benefits both tax authorities and businesses.
Electronic filing helps tax authorities manage their workload more effectively
and spend less money processing, storing, and handling tax returns. It also
speeds up time savings and promotes tax compliance. By lowering
computation errors on tax returns and making it simpler to prepare, file, and
pay taxes, electronic filing helps taxpayers save time. For instance, the
expense of filling out various reporting forms and tax returns might potentially
amount to up to 1.2% of the US GDP for personal income tax filing and
reporting in the US. A decrease in possible instances of corruption, which are
more likely to happen with more regular interactions with tax administration
workers, is advantageous to both parties.

The ability to file and pay taxes electronically has benefited businesses in a
few Latin American and Caribbean economies. To gradually enhance the
economy's level of digitalization and use of banking services, the government
of Uruguay, for instance, enacted the Financial Inclusion Act on May 9, 2014,
which includes the mandatory electronic payment of national taxes. By the
beginning of 2016, many taxpayers were using the government's online
platform to file and pay their taxes. The tax office now accepts electronic
submissions for several tasks that were formerly performed in person,
including registration, credit certificate applications, payments, and accountant
certificate submissions. Most taxpayers may now access the online portal, and
thanks to the system's upgraded capabilities, it now takes 81 hours less time to
comply with the three main taxes as determined by Doing Business.

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 Effective tax administration through risk-based tax audits

An economy's level of informality can be decreased, and the effects of a high

tax burden can be mitigated by effective tax administration. There are several
actions that can be taken to improve tax administration. However, adopting
risk-based tax audits may be the most significant of them. The effectiveness of
tax audits, which are necessary for accurate tax reporting, is seen to increase
with risk-based auditing and well-trained tax auditors. 12 For instance, the
risk-based audit system in Thailand does not signal tax returns for an audit
when they contain errors or when the amount of tax duty due is underpaid.

6.2 Insurance

Use an Omni channel approach to interact with customers

Insurance companies should concentrate on connecting their platforms and

systems to enable agents to conduct interactions with consumers that flow
naturally across various channels.

The goal of the multichannel sales strategy known as the "Omni channel" is to
give customers a seamless purchasing experience. The term "insurance Omni
channel" describes the ability to interact with clients through both online and
offline channels in order to guarantee customer satisfaction. Both consumer
engagement and cost savings are possible for insurers. The post-coronavirus
digital era's most successful carriers are implementing this strategy by giving
priority to three elements: accessibility of online purchase capability,
simplicity of navigating online customer journeys, and seamless integration of
sales support and advice capabilities. In order to successfully adopt this
strategy, insurers must first build a foundation centred on the customer journey
and supported by chosen organisational competencies.

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Simplify the Experience

You're accustomed to a flawless user experience as a customer of today's

businesses. The same should hold true for your insurance provider. Insurance
customers do not always have an easy time. We make every effort to make it
pleasurable and simple so you can concentrate on your family and business.
Key advantages of streamlining customer service include cost savings via
inbound marketing, virtual assistants, and customization. Simplifying the
procedure removes complexity, makes it simpler to get insurance, and
improves consumer satisfaction.

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7.0 REFERENCES

 GROUP, W. O. R. L. D. B. A. N. K. (2021). Paying Taxes Good Practices. Paying taxes good

practices - doing business - World Bank Group. Retrieved January 14, 2023, from
https://subnational.doingbusiness.org/en/data/exploretopics/paying-taxes/good-
practices

 GROUP, W. O. R. L. D. B. A. N. K. (2021). Tax revenue (% of GDP). Data.

Retrieved January 14, 2023, from
https://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?
+end=2020&start=1972&view=chart+https%3A%2F%2Fptop.only.wip.la%3A443%2Fhttps%2Fwww.oecd.org
%2Fcoronavirus%2Fpolicy-responses%2Fresponding-to-the-covid-19-and-
pandemic-protection-gap-in-insurance-35e74736%2F

 Murugiah, S. (2021, October 26). More than a third of Malaysians do not have
any personal insurance protection, says Zurich. The Edge Markets. Retrieved
January 14, 2023, from https://www.theedgemarkets.com/article/more-third-
malaysians-do-not-have-any-personal-insurance-protection-says-zurich

 OECD, O. E. C. D. (2021, March 16). Responding to the COVID-19 and

pandemic protection gap in insurance. OECD. Retrieved January 14, 2023, from
https://www.oecd.org/coronavirus/policy-responses/responding-to-the-covid-19-
and-pandemic-protection-gap-in-insurance-35e74736/

 Tanzi, V., & Zee, H. (2001, March). Economic issues no. 27 -- tax policy for
developing countries.. International Monetary Fund. Retrieved January 14, 2023,
from https://www.imf.org/external/pubs/ft/issues/issues27/

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8.0 APPENDICES

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