What Happens To My Insurance Benefits If My Insurer Goes Bust?
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One of the primary reasons people buy insurance products from insurance companies is so that
they are compensated for financial losses arising from unfortunate events. But, have you ever
wondered what happens if your insurer loses the ability to protect you?
If your insurer fails and is unable to honour your takaful or insurance benefits, you can count on
Perbadanan Insurans Deposit Malaysia or PIDM, a government agency, to ensure that you will
not lose your takaful and insurance benefits.
The Takaful and Insurance Benefits Protection System (TIPS) is designed to protect takaful
certificate and insurance policy owners from the loss of their eligible takaful or insurance
benefits if their insurers fail.
In other words, PIDM makes sure that you are protected even in bad times.
Takaful and Insurance Benefits Protection System (TIPS)
TIPS protection is automatic, no sign-ups and no fees is required. PIDM will make payment for
eligible takaful certificate and insurance policy claims if the insurer goes bankrupt.
The following are the eligible benefits protected by PIDM and their corresponding protection
limits:
| FAMILY TAKAFUL / LIFE INSURANCE | |
|---|---|
| Benefits Protected | Maximum Limit (Individual or Group Policies/Plans) |
| Death and related benefits | RM500,000 |
| Permanent disability | RM500,000 |
| Critical illness | RM500,000 |
| Maturity value (excluding the unit portion of investment-linked certificates or policies) | RM500,000 |
| Surrender value | RM500,000 |
| Accumulated cash dividend | RM100,000 |
| Disability income | RM10,000 per month |
| Annuity income | RM10,000 per month |
| Medical expenses | 100% of expenses incurred |
| Refundable prepaid contribution or premium | 100% of amount prepaid |
| GENERAL TAKAFUL / GENERAL INSURANCE | |
|---|---|
| Benefits Protected | Maximum Limit (Policies/Plans) |
Loss of or damage to property in relation to:
| RM500,000 per property |
| Death and related benefits | RM500,000 |
| Permanent disability | RM500,000 |
| Critical illness | RM500,000 |
| Disability income | RM10,000 per month |
| Medical expenses | 100% of expenses incurred |
In relation to indemnification against claims by a third party:
|
|
| Refundable prepaid contribution or premium | 100% of amount prepaid |
To be eligible for protection under TIPS, the takaful certificate or insurance policy must be
issued in Malaysia by a PIDM insurer member and be denominated in Ringgit Malaysia.
Who is protected by TIPS?
YOU. As long as you have a takaful certificate or insurance policy from PIDM insurer members.
PIDM insurer members are takaful or insurance providers licensed under the Financial Services
Act 2013 and the Islamic Financial Services Act 2013. However, take note that PIDM insurer
members exclude reinsurance or retakaful operators, Labuan takaful or insurance companies,
international takaful operators, and financial guarantee insurers (such as, Danajamin Nasional
Berhad).
When in doubt, just remember to check PIDM website at www.pidm.gov.my for a full list of
PIDM insurer member, or look out for PIDM membership sign that are displayed at the offices of
the insurer members. Alternatively, you can ask your insurer or insurance agent whether your
insurer is a member of PIDM, the benefits protected and their protection limits.
How PIDM protects your deposits and insurance and takaful benefits
PIDM was originally set up to administer the Deposit Insurance System by protecting bank
deposits so that Malaysians can have prompt access to their money if the bank goes… well,
bankrupt.
TIPS coverage was later added when PIDM’s mandate was expanded to provide protection for
the takaful certificate and insurance policy owners.
In the event a PIDM insurer member fails and is unable to honour takaful or insurance benefits
protected under TIPS, PIDM will make a payment of the eligible takaful or insurance benefits to
the takaful certificate or insurance 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 policy owners.
Ultimately, the protection provided by PIDM ensures that you get prompt access to your
deposits, takaful and insurance benefits even when the unthinkable happens.
