While filing your taxes, you may have come across the Life Insurance Relief.
It sounds straightforward. You have paid for your own life insurance, so surely you can claim the relief and reduce your taxes?
In reality, most working Singaporeans cannot. And the CPF changes of recent years have made it even harder to qualify. Here is how the relief works in 2026, who can actually claim it, and while we are on the topic, whether life insurance payouts are taxable at all.
What Is the Life Insurance Relief (& How Do You Qualify)?
The Life Insurance Relief is a tax relief for premiums paid on your own or your spouse’s life insurance policy, claimable only if your CPF contributions for the year were below $5,000.
To claim it for YA2026, IRAS requires that:
- You paid premiums in 2025 for your own or your spouse’s life insurance policy
- For policies bought on or after 10 August 1973, the insurer has an office or branch in Singapore
- And the difficult one: your total compulsory employee CPF contributions, plus compulsory MediSave or voluntary CPF contributions as a self-employed person, in 2025 were less than $5,000
Note that since YA2023, voluntary cash top-ups to your own MediSave account no longer count towards the $5,000 limit, so a MediSave top-up won’t affect your eligibility for this relief. Some older guides still include it.
The exclusion list is longer than most people expect. Premiums for accident and health policies do not count, so MediShield Life, CareShield Life, and Integrated Shield Plans are all excluded. Neither do standalone critical illness policies, endowment policies, investment-linked policies where the investment component is a fundamental consideration of the policy, or riders attached to a life policy (such as critical illness, TPD, and premium waiver riders).
That last point catches many people out. If you hold a whole life policy with a critical illness rider, only the premium for the base policy counts, not the rider. Your insurer can give you the breakdown.
One change worth knowing for YA2026 is that the relief now works both ways between spouses. Previously, a husband could claim premiums paid on his wife’s policy, but a wife could not claim premiums paid on her husband’s. From YA2026, she can.
Like every relief, it counts towards the overall cap of $80,000 per Year of Assessment, which we cover in our guide to reducing income tax in Singapore.
SIDE NOTE
A policy bought years ago. Savings in three places. A will that's still on the to-do list.
None of it is wrong. It's just not a plan yet.
There's an order that turns the pieces into one system, and it doesn't require becoming a finance expert. Here's the order, in 7 steps, so you know what to sort out first.
Can Foreigners Claim the Life Insurance Relief?
Yes, as long as you are a Singapore tax resident and meet the same conditions.
In fact, foreigners (excluding PRs) often find it easier to qualify, because they do not contribute to CPF, so the $5,000 condition rarely blocks them.
Why Most Singaporeans Don’t Qualify
The $5,000 CPF condition rules out nearly every full-time employee, because compulsory contributions cross that line at fairly modest salaries.
Using the CPF employee contribution rates for 2026, here is the annual salary at which your own CPF contributions reach $5,000:
| Age | Employee CPF contribution rate (2026) | Annual salary where contributions hit $5,000 |
|---|---|---|
| 55 and below | 20% | $25,000 |
| Above 55 to 60 | 18% | $27,778 |
| Above 60 to 65 | 12.5% | $40,000 |
| Above 65 to 70 | 7.5% | $66,667 |
| Above 70 | 5% | $100,000 |
Figures apply to Singapore Citizens and PRs (third year onwards) earning more than $750 a month, before any voluntary contributions.
In other words, if you are below 55 and earn $25,000 or more a year, you are already out.
It has also become harder for older workers. When we first wrote this guide in 2021, an employee aged 60 to 65 contributed 7.5% and could earn up to about $66,667 before crossing the line. With the senior worker rate rises since then, the same worker now contributes 12.5% and crosses the line at just $40,000, based on the CPF Board’s 2026 rates.
The groups most likely to qualify today are those who took a career break, part-time and low-income workers, those above 65, and foreigners without CPF.
For the self-employed, compulsory MediSave contributions do the same blocking. In general, a Net Trade Income of around $62,500 or more puts you past $5,000, and the threshold is lower still at older ages, where MediSave rates are higher.
One more thing worth remembering: if your income is low enough to qualify, your tax bill is often minimal anyway, since the first $20,000 of chargeable income is taxed at 0%.
QUICK CHECK
Can you answer these three questions?
1) If something happened to you tomorrow, how much would your family receive?
2) At 65, what monthly income will your savings and investments pay you?
3) If you never get round to a will, who inherits what, and in what proportion?
Most people manage one at best. Not because they're careless, but because nobody has shown them which order to tackle things in.
That order exists. Work through your finances in this sequence, from income and protection through to investments and estate planning.
How Much Life Insurance Relief Can You Claim?
If you do qualify, you may claim the lower of:
- The difference between $5,000 and your CPF contributions, or
- Up to 7% of the insured value of your or your spouse’s policy, or the actual premiums paid, whichever is lower
Here is an illustration. Suppose your policy has an insured value of $60,000, you paid annual premiums of $4,000, and your CPF contributions for the year were $1,500:
- Amount (1) is $5,000 – $1,500 = $3,500
- Amount (2) is the lower of 7% x $60,000 = $4,200 and premiums of $4,000, so $4,000
You can claim the lower of the two: $3,500.
Even a successful claim tends to be modest. Nobody should buy life insurance for this relief.
Are Life Insurance Payouts Taxable in Singapore?
No. Life insurance payouts are not taxable in Singapore. The reason is a basic principle of how the country taxes: only income is chargeable to tax, and a payout on a policy you own is a capital receipt rather than income.
This applies across the payouts an individual or their family might receive:
- Death benefits paid to your beneficiaries or estate
- Total and permanent disability (TPD) payouts
- Critical illness lump sums
- Maturity and surrender proceeds from a policy you own personally
Your family receives the full sum assured with nothing deducted.
Don’t Forget the Purpose of Having Life Insurance
Since most people get no tax benefit from their premiums, the reason to hold life insurance is the reason it has always been. Your dependants are provided for if something happens to you.
Whether the amount you hold is enough is a separate question, and often an uncomfortable one. Claims data shows the average critical illness payout is around $52,000, which may fall well short of what a family needs to get through a serious illness.
So the more useful thing to check is not whether your policy earns a relief, but whether your coverage amount still holds up, and whether your mix of term insurance and whole life insurance suits the stage of life you are in now. The relief, for the few who qualify, is a bonus.
And if nobody has looked at your policies alongside your CPF and savings as one picture in a while, that is what our comprehensive financial planning session is for.
BEFORE YOU GO
Articles can tell you what generally makes sense. They can't see your policies, your CPF, or your plans.
FullCircle is our comprehensive financial planning session. A licensed consultant goes through what you have, shows you the gaps and overlaps, and tells you what to prioritise across protection, retirement, and estate planning.
It's complimentary, takes about 45 minutes, and if nothing needs changing, we'll say so.