Takaful & Insurance Benefits Protection System (FAQs)

Takaful & Insurance Benefits Protection System (FAQs)

A: The Takaful and Insurance Benefits Protection System (TIPS) is a system established by the Government to protect owners of takaful certificates and insurance policies from the loss of their eligible takaful or insurance benefits in the event that an insurer member fails and is unable to honour the takaful or insurance benefits. Failure in this context refers to when the insurer member is no longer viable or becomes bankrupt. TIPS is administered by PIDM.

A: All takaful operators licensed under the Islamic Financial Services Act (IFSA) 2013 to conduct family or general takaful business in Malaysia, as well as insurance companies (including locally incorporated subsidiaries of foreign insurance companies operating in Malaysia) licensed under the Financial Services Act (FSA) 2013 to conduct life or general insurance business in Malaysia are member institutions of PIDM. Membership in PIDM is compulsory as provided under Akta Perbadanan Insurans Deposit Malaysia.

Takaful operators and insurance companies which are member institutions of PIDM are referred to as ‘insurer members’. Look out for this membership sign at the entrance to the offices of your takaful operator or insurance company.

PIDM Decal
pidm-(1).jpg

A: The following institutions are not insurer members of PIDM:
  • Reinsurance companies and retakaful operators
  • International takaful operators licensed under the Islamic Financial Services Act (IFSA) 2013
  • Financial guarantee insurers such as Danajamin Nasional Berhad
  • Offshore insurance companies
  • Other players in the insurance industry, such as insurance brokers and adjusters

A: No, you do not need to apply or register. You are automatically protected for eligible takaful and insurance benefits.

A: Yes, all takaful certificate and insurance policy owners are eligible for protection under TIPS if their takaful certificates or insurance policies are issued in Malaysia by an insurer member and denominated in Ringgit Malaysia.

A:  To be eligible for protection under TIPS, the takaful certificate or insurance policy must be issued in Malaysia by an insurer member and be denominated in Ringgit Malaysia. The takaful and insurance benefits protected under under the eligible takaful certificate or insurance policy and related limits are set out in Table 1 below.

Table 1: Protected benefits and limits of protection
 
Protected Benefits  Limits of Proctection (Individual or Group Policies/Plans)**
Death and related benefits arising from death RM500,000
Disability and related benefits arising from disability RM500,000
Illness and related benefits arising from illness RM500,000
Maturity and related benefits arising from maturity* RM500,000
Surrender and related benefits arising from surrender* RM500,000
Income* RM500,000
Healthcare 100% of amount payable
Pecuniary loss RM500,000
Value of that family takaful certificate or value of that life policy RM500,000 for one or more family takaful certificates or life policies
Refundable prepaid contribution or premium
  • For medical and health takaful certificates or insurance policies
  • For takaful certificates or insurance policies which are required under the Road Transport Act 1987 and Workmen’s Compensation Act 1952
  • For other takaful certificates or insurance policies
  
  • 100% of amount prepaid
  • 100% of amount prepaid



    •  
  • RM500,000 per takaful certificate or insurance policy
Loss of or damage to property and consequential loss RM500,000 for each property
Loss of or damage to property of any third party and consequential loss RM500,000 for each property
Death of any third party and related benefits arising from death RM500,000
Disability of any third party and related benefits arising from disability RM500,000
Illness of any third party and related benefits arising from illness RM500,000
Injury of any third party and related benefits arising from injury RM500,000
Healthcare of any third party 100% of amount payable
Pecuniary loss of any third party RM500,000
 

* Maturity, surrender and income benefits payable from the unit portion of investment-linked takaful certificates or insurance policies are not protected under TIPS.

**Any claims by certificate or policy owners will be subject to the conditions and limits specified in their takaful or policy contracts.

A: Examples of takaful or insurance benefits not protected under TIPS include benefits under takaful certificates and insurance policies denominated in foreign currency, as well as maturity, surrender and income benefits payable from the unit portion of investment-linked certificates or policies. However, misfortune benefits (such as death benefits) payable from the unit portion of the investment-linked certificates or policies are protected under TIPS.

A: Yes. The benefits protected under your individual certificate or policy and a group certificate or policy will be calculated separately in arriving at the maximum limit. This is because the protection system provides separate limits for different policy owners and beneficiaries, allowing you to enjoy more protection.

A: No. Your takaful and insurance benefits with different insurer members are protected separately. The protected benefits under TIPS will be aggregated only if they relate to the “same insurer member, same risk event, same life insured or insured property, and same takaful certificate or policy owner”.

A: Each life insured is separately protected. This means even if you have purchased several takaful certificates or insurance policies for different family members from the same insurer member, you will be protected based on each individual family member who is insured. You may refer to this example: 

Mr. and Mrs. Tan purchased several life insurance policies for their family from the same insurer member.
 

Policy Owner: Mr. Tan

Policy Owner: Mrs. Tan

Life insured

Amount insured (RM)

Life insured

Amount insured (RM)
Policy 1: Son (Adam) 200,000 Policy 4: Son (Adam) 100,000
Policy 2: Daughter (Alice) 150,000 Policy 5: Son (Adam) 50,000
Policy 3: Mr. Tan 600,000 Policy 6: Mrs. Tan 400,000

Death of Adam

Amount claimable under Mr Tan’s policies

RM200,000 (Policy 1)

Amount claimable under Mrs Tan’s policies (RM100,000 + RM50,000)

RM150,000 (Policy 4 and 5)

Total amount claimable under TIPS

RM350,000

Death of Mr Tan

Amount claimable under Mr Tan’s policies

RM500,000* (Policy 3)

*maximum limit under TIPS

A: No. Protection for your takaful certificate and insurance benefits under TIPS is not a commercial takaful or insurance policy you can purchase. It is provided by the Government through PIDM. You do not have to register or apply for protection under TIPS as it is provided automatically for eligible takaful or insurance benefits.

A: Your takaful or insurance benefits will continue to be protected separately until the fulfilment of all obligations by the insurer members, including the payment upon occurrence of a claims event, maturity or surrender of the takaful certificate or insurance policy.

A: If an insurer member fails and is unable to honour the takaful or insurance benefits under TIPS, PIDM will make a payment of the protected benefits to the certificate or policy owners.

PIDM may also arrange for transfer of takaful certificates or insurance policies from the failed insurer member to another insurer member to secure continuity of coverage for takaful certificate or insurance policies owners.

A: In the event that PIDM is required to resolve a troubled insurer member, we will announce how, where and when payments for your takaful or insurance benefits protected under TIPS would be made. Claims must be lodged with PIDM upon occurrence of the claims event, maturity or surrender of the takaful certificate or insurance policy within a specified time frame. You will be notified of this time frame by PIDM in writing and by newspaper advertisement.

A: Call PIDM's toll free information line: 1-800-88-1266, available Mondays to Fridays from 8.30 am to 5.30 pm or email to: info@pidm.gov.my