Frequently Asked Questions


See answers to frequently asked questions about Life Insurance and Family Takaful in one easy place.

Life Insurance FAQ

Your frequently asked questions about Life Insurance answered.


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There are so many types of insurance out there. Where do I start?


In general, Life Insurance can be broadly categorized into:

  • Traditional insurance
  • Investment linked insurance
  • Medical and health insurance


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What are the key considerations in purchasing a Life Insurance policy?


Here are a few things you will need to consider before purchasing a Life Insurance policy:

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Risks that you wish to cover

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While Life Insurance policies generally cover death, some policies cover more specific risks such as the early onset of a critical illness, accidental death and partial disability.


Your financial goals

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These can be as specific as legacy planning for your children or saving for your retirement years. These goals should have specific time frames or investment horizons.


Your desired protection level

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Factors you should consider include:

  • The number of dependents you have (e.g. retired parents, spouse, children)
  • Outstanding long-term financial commitments (e.g. housing loan, education fund)
  • Lifestyle/standard of living
  • Savings and investment assets
  • Projected cost of expenses in the future based on currency valuation and inflation (e.g. an education degree at a private university today may cost 50% more years down the road)


Your budget

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The amount that you can set aside for Life insurance after the deduction of expenses, commitments and savings. If budget is tight, you might want to consider cheaper alternatives such as term insurance so that you can still enjoy basic coverage.


Your risk appetite

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Assess your risk appetite. Are you a conservative investor who prefers lower but consistent returns? Or perhaps you prefer high-risk investments, which may be volatile in the short-term but provide capital appreciation over the longer term.

Also, consider the main purpose of your insurance coverage. If protection is your main concern, it would be advisable to choose the conservative route as dynamic funds pose higher risks.


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TRADITIONAL INSURANCE


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What Does Traditional Insurance offer?

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Traditional Insurance offers protection where the premiums are payable throughout the duration of the insurance policy. The benefits payable is guaranteed, although some plans also offer non-guaranteed benefits such as cash bonuses.


What types of traditional Life Insurance are commonly available in the market?

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Whole Life Insurance provides long-term protection. A lump sum benefit is payable upon Death or Total and Permanent Disability (TPD) of the Life Assured during the policy term, or upon maturity of the policy. It is generally available in different forms:

  • Participating plan: Plans that enable you to share in the profits of the insurance company through its "participating fund". Profits are paid out in the form of non-guaranteed cash bonuses and dividends subject to company's actual declarations.
  • Non-participating plan: Plans that do not participate in the insurance company's "participating fund".

Term Insurance only provides protection for a fixed period of time, from as short as 5 years to 30 years or more. Since this does not come with any saving or investment feature, terminating it prematurely will not lead to any payable cash value. Upon Death or Total and Permanent Disability (TPD) of the Life Assured during the policy term, the policy will pay out the sum assured.
Endowment Insurance offers protection and savings for a fixed period of time. A lump sum benefit is payable at the end of the policy term, or upon Death or Total and Permanent Disability (TPD) of the Life Assured during the policy term. Some endowment policies may also pay out a yearly guaranteed cash benefit throughout the policy term, as long as you live until the end of the policy term.
Annuity guarantees fixed payments at regular intervals (usually monthly), for as long as the Life Assured lives or for a fixed period of time. It is usually purchased to supplement income during the retirement years. The premium is usually payable as a lump sum but some plans do offer options for regular premium payments for a specific duration.


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INVESTMENT-LINKED INSURANCE


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How is investment-linked insurance different from traditional insurance?

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An investment-linked insurance combines protection and investment, where a portion of the premiums you pay are used to invest in investment-linked funds of your choice. The total benefits payable may include fund values which vary according to the performance and value of the underlying assets of the selected investment funds at that time. Investment-linked insurance plans allow you to adjust the protection and investment levels according to your needs and goals.


What types of investment-linked Life Insurance are available in the market?

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Regular Premium Investment-Linked Insurance provides long-term protection and the opportunity to grow your investments. A lump sum benefit is payable upon death or Total and Permanenet Disability (TPD) of the Life-Assured during the policy term, or upon maturity of the policy. Generally, the lump sum benefit payable includes the sum assured and the total investment value of your policy.
Single Premium Investment-Linked Insurance is designed primarily for investment purposes. This type of plans may not offer as much protection as regular premium investment-linked insurance plans, but the premium allocation rates are much higher.


What does 'premium allocation rate' mean in an investment-linked insurnace policy?

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This refers to a percentage of the premium paid that is set aside for investment into investment linked funds of your choice.


How can I customise my investment-linked insurance policy to suit my needs and goals?

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Some life insurance companies now include the "guaranteed insurability" benefit by default into their investment linked insurance plans. This enables you to easily increase your protection coverage during major life events without the need for underwriting (e.g. assessment of lifestyle, occupation and medical history). Life events may include marriage, having a child or buying a house.

You can opt to switch funds at any time to match your risk appetite, increase or decrease portfolio exposure to risky assets. Insurance companies generally offer a wide range of professionally managed investment-linked funds including local funds and foreign funds that cater customers with the different risk appetites.


Is the returns on investment-linked funds guaranteed?

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No. The prices of fund units depend on the market value.


Do I have to surrender my investment-linked insurance plan if I decide to change the investment fund?

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No. It is not advisable to surrender your existing insurance plan if you decide to change the investment fund as you might end up getting less than what you have invested due to fees and charges. You may switch funds if it is allowed bu you may be charged a processing fee.


Can I increase my investment?

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Yes. You are allowed to top up on your existing investment-linked fund at any time. You can also increase the coverage for death, critical illness, hospitalisation, accident and others.


How long should I hold my investment-linked insurance plan?

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There is no fixed period of time for you to hold on to your investment-linked insurance plan although it is not advisable to hold it for a short period of time in view of the high intial costs.


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MEDICAL AND HEALTH INSURANCE


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What is medical and health insurance?

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Medical and health insurance covers medical and surgical-related expenses such as the cost of hospitalisation, surgical fees and physician consultation fees. The premium rates are calculated based on your attained age, gender, occupation, health condition and the selected plan. They are not guaranteed and may be revised from time to time. This is due to the ever-increasing number of medical claims and escalating medical costs.


What are some of the important things to look out for in medical and health insurance?

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Co-insurance/deductibles
Co-insurance - You pay a percentage of the incurred medical expenses, as stipulated under the terms and conditions in the policy. However, some plans may set a limit on the co-insurance payable. For example: 10% co-insurance on the medical bill, up to a maximum of RM500.

Deductibles - You pay a stipulated amount of the incurred medical expenses, the excess of which will be covered by the life insurance company. For example, if your plan has a deductible of RM2,000, it means you will need to pay the first RM2,000 incurred in a medical bill while the insurance company covers the rest. If the medical bill is less than RM2,000, the insurance company does not bear any cost.

Benefits-exclusions and limitations
There are some exclusions and limitations. For example, selected illnesses that occur within the first 120 days from the commencement date of the policy or any medical event as a result of a pre-existing medical condition is not covered. Ask your servicing agent to go through the list with you.

Pre-existing medical conditions
The insurance company's decision to insure you is based on the information provided in the proposal form, medical examination report (if required), etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

Premium rates
Premium rates for medical and health insurance are not guaranteed and may be revised from time-to-time. This is due to the ever-increasing number of medical claims and escalating medical costs. Premium rates will also increase as you grow older.

List of panel hospitals
Ask your servicing agent for the list of panel hospitals under the medical and health insurance policy.

Family vs. individual coverage
Some life insurance companies offer discounts when you sign up for two or more policies for your loved ones.


What does 'guaranteed renewal' mean in a medical and health insurance policy?

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"Guaranteed renewal" means that the life insurance company guarantees the renewal of the policy, subject to the terms and conditions specified in the policy. The premium payable, however, is not guaranteed nor fixed. In practice, the renewal of the policy is guaranteed until/unless certain events have occurred, such as:

  • You did not pay your premiums or did not pay them on time
  • You misrepresented a material fact, for example age or a medical condition, during your application
  • You cancelled the policy
  • The total claims under the policy have reached the overall limit specified
  • You have reached the age limit for coverage at the point of policy renewal


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BUYING AN INSURANCE POLICY


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What should I be aware of when I buy a Life Insurance policy?

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Deal only with registered agents
Life insurance agents who are registered with the Life Insurance Association of Malaysia (LIAM) are required to pass a pre-contract examination that is conducted by the Malaysian Insurance Institute (MII). They can only represent one life insurance company and provide advice on the products marketed solely by that company. Always insist on seeing an agent’s authorisation card that is issued by LIAM. You can check the status of the agent via the LIAM website.

Know your rights
If you intend to purchase a Life Insurance product from life insurance agents, you can ask for a copy of the insurance company’s service guide. It is a simple checklist detailing the obligations and value-added services that an agent provides at the following stages – before you buy a policy, when you decide to buy a policy and during the term of the policy.

Understand the product well
Do not be tempted by verbal promises or guarantees of high returns. Insist on product-related documents such as Sales Illustration, Product Disclosure Sheet and/or fund performance reports before committing to buy a Life Insurance policy.

Disclose required information
Insurance companies have put in place an underwriting process to determine what type of risk you are to the insurance company and for the company to decide whether or not to accept the risk.

The risk of death or a critical illness is determined by several factors such as age, gender, lifestyle habits, personal and medical history, occupation, etc. You will probably come across these terms:

  • Standard Life – It generally means you do not have any serious medical condition, or you hold a low-risk occupation. You are charged standard premium rates.
  • Sub-standard Life – It generally means you have pre-existing medical condition(s), or you hold a high-risk occupation. As a person with a higher than average risk, you would either have to pay additional premium (also known as premium loading) or agree for certain exclusions to be included in your policy. In some cases, the insurance company may reject your policy application if they deem you to be an uninsurable risk.

You must truthfully disclose information that is required in the proposal/application form. If you are unsure about disclosing certain information, it is recommended that you disclose it anyway. This includes any information that you may have given to your agent but was not included in the proposal form. The insurance company’s decision to insure you is based on the information provided in the proposal form, medical examination report (if required), etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

Practice caution
Make sure that the proposal form is filled up properly. Do not sign any blank or incomplete forms. If you spot any inaccurate or missing information, ask for the form to be amended immediately. Do not release your identity card or credit card details to someone you do not know or without first clarifying why it is needed.

You are discouraged from passing cash or a cheque to your servicing agent to pay for your Life Insurance premiums. Agents, even honest ones, can forget to pay for your policy; which may cause your policy to lapse after the grace period is up. Instead, opt for secure and convenient payment methods such as direct debit deduction.


Can I purchase a Life Insurance policy directly from the insurance company?

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Life Insurance is traditionally sold through company-appointed intermediaries such as agents, brokers and bancassurance partners. As professional financial planners, they are equipped with the relevant knowledge to advise and guide you in your purchase of a Life Insurance policy.

In recent years, Bank Negara Malaysia has mandated all insurance companies, through the Life Insurance and Family Takaful Framework, to set up direct purchase channels for Life Insurance products. This means that you are given an option to purchase Life Insurance online or over the branch counter. Most insurers offer simple term Life Insurance products through direct purchase channels. There are plans to offer other types of products through direct purchase channels in the future.


Is a Life Insurance sales illustration a legally binding document?

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A sales illustration is not a legal document. The legal obligations of a Life Insurance policy are spelt out in the policy document.


What if I do not agree to the terms spelt out in the Life Insurance policy that I have just bought?

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You can cancel your Life Insurance policy within the 15-day “free-look period” by returning the policy to the insurance company after you have received the policy document. The total premiums paid will be fully refunded to you.


I spotted a new Life Insurance product that I like.
Can I cancel my current policy and purchase a new policy?

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Since buying a Life Insurance policy is a long-term commitment, it is not advisable to terminate your policy early because the surrender value is usually less than the total premiums paid. You might also be charged with a higher premium if you purchase a new policy since you are older now. Depending on your health condition, you might be seen as a person with higher risk and that could affect your new policy.


What will happen to my Life Insurance policy if I fail to pay my premium on time?

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There is a “grace period”, which gives you an additional period of time after the premium payment due date. During this period, you can still pay your premium and your policy still continues to be in-force. Usually, you are given a grace period minimum of thirty (30) days from the Billing Date, subjected to the company practices. If your Life Insurance policy has lapsed, you may revive or reinstate it within a period of time and under certain conditions such as the declaration of your state of health at the time of reinstatement.


What do I get if I choose to surrender / terminate my Life Insurance policy?

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Traditional Life Insurance with Cash Value
Your Life Insurance policy may acquire a cash value after being in-force for a number of years (normally a minimum of three years). The cash value is the “savings” portion of the policy. Cash value is accumulated when your premium payments are more than the cost of insurance, so the excess goes into a cash value account and draws interest. If you decide to surrender your Life Insurance policy, the cash value, also known as surrender value, will be payable. You will suffer a loss if you surrender your policy before the maturity of the policy.

Investment-Linked Insurance
When you terminate your investment linked insurance policy, you will receive the investment value of your policy at the time of termination. As it is calculated based on the market value of the remaining fund units in your policy’s investment account, you may get back less than the total premiums paid.


I can no longer afford to pay for my premiums, for one reason or another.
What can I do?

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Speak to your servicing agent about the options available.

Traditional Life Insurance with Cash Value
The life insurance company can often make changes to ensure that your Life Insurance policy can remain in-force without further premium payments. A common option includes conversion of your policy into paid-up policy which involves reducing the initial sum assured or reducing the policy term through utilising the remaining cash value.

Investment Linked Insurance
As a portion of the premiums paid is invested into investment funds of your choice, your investment linked insurance policy will accumulate an investment value over time. If the investment value of your policy is substantial, your policy will continue to remain in-force as long as there is sufficient value to pay for the insurance charges, policy fee and supplementary benefit premiums, where applicable. However, there is no guarantee as to how long the policy will remain in-force as the investment value is dependent on the market value of the remaining fund units in your policy’s investment account.

You may choose to reduce your sum assured to reduce the insurance charges and prolong the policy term.


List of Distribution Channels

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  • Agency
  • Banks
  • Direct Distribution – Online / Branch Walk-In
  • Direct Marketing / Telemarketing
  • Financial Advisers
  • Brokers
  • Post Office


Family Takaful FAQ

Your frequently asked questions about Family Takaful answered.


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What is Takaful?


Takaful is an insurance concept which is grounded in Islamic Muamalat, observing the rules and regulations of Shariah. It is a concept that has been in practice for over 1,400 years.

In principle, the Takaful system is based on mutual co-operation, responsibility, assurance, protection, and assistance between groups of participants. In other words, it is the provision of shared contributions to help those who are in need.


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What are the differences between Takaful and Conventional Insurance?


Takaful

  • Subject to Islamic Financial Services Act (IFSA) 2013
  • Participant makes contribution based on Tabarru’ (Donation) concept
  • Takaful Operator is the Fund Manager
  • Participation in a Takaful plan is based on contract of mutual assistance amongst participants
  • Shariah Committee is formed to ensure that the Takaful Operator’s transaction is done in accordance with the Shariah Principle
  • No elements of Maisir (gambling) and Riba’ (interest). Note: Gharar (uncertainty) exists in Takaful but tolerable under Tabarru’ (Donation) contract

Insurance

  • Subject to Financial Services Act (FSA) 2013
  • Policyholder pays premium for the protection amount
  • Insurance Company is the Risk Owner
  • Insurance is a contract of buy and sell between the Insurance Company and Policyholder
  • No need for formation of Shariah Committee
  • Existence of Gharar(uncertainty), Maisir (gambling) and Riba' (interest)


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How does Takaful work?


Takaful is an Islamic insurance concept which adheres to ethics and transparency of Shariah guidelines that prohibit uncertainty (Gharar), gambling (Maisir) and interest (Riba). The word Takaful is derived from the Arabic verb Kafala, which means to guarantee, to help or to take care of one's needs.

Each participant contributes on the basis of “iltizam bi al tabarru” (donation) into a fund that will be used to support each other in times of need.


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What are the Islamic principles adopted by the Takaful Operators?


Tabarru’ (Donation)
In Takaful business, Tabarru' is a donation for the purpose of mutual protection among the participants.
Tabarru' is credited from the Participant's Investment Fund (PIF) to the Participant's Risk Fund (PRF) which will be used to help other participants in the event of any misfortune.

Wakalah
Wakalah (agency) contract in Takaful business refers to a contract established between the Participant and Takaful Operator where the Certificate Owner appoints the Takaful Operator as a wakeel (agent) to manage the Takaful funds on behalf of the Participant in accordance with the Shariah principles.
The main tasks of Takaful Operators that are appointed by the wakalah contract are to manage the Participant's Risk Fund (PRF) and also invest the Participant's Investment Fund (PIF) based on the investment contract of mudharabah, wakalah bi a istihtmar, etc.

Ta’awun
Ta’awun means corporation or solidarity (based on the spirit of brotherhood, righteousness and piety). In Takaful context, ta'awun is referred to as mutual help and indemnity where the participants are committed to making donations with the intention to help each other against any defined perils within the Takaful scheme.


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What does Takaful cover?


Takaful is a mutual guarantee provided by a group of participants against a defined risk or catastrophe befalling a person (financial protection in the event of death, disability or illnesses), property or any form of valuable things.


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What are the benefits of Takaful plans?


Protection/Coverage
The tabarru' which is credited from the Participant’s Investment Fund (PIF) to the Participant's Risk Fund (PRF) will be used to help you in the event of any misfortune.

Investment Profit
Payment of the contribution shall be allocated to the Participant’s Investment Fund (PIF) after deducting the wakalah fee. The Takaful Operator will manage and invest the allocated contribution in shariah-compliant securities. The profits from the investment performance will retain a certain percentage based on different investment contracts for your benefit.

Surplus
If there is net surplus in the Participant’s Risk Fund (PRF) at the end of the financial year, it shall be distributed to you and the Takaful Operator in the agreed ratio based on the type of Takaful plan, provided that you have not incurred any claims and/or the Certificate Owner has not received any benefits payable under each type of cover under this certificate whilst it is in force.


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What is the difference between Contribution and Tabarru’?


Contribution is the gross amount paid by you without any deduction of charges in participating in any Takaful plan. Whereas tabarru’ is the net portion of your contribution channelled into the Participant’s Risk Fund (PRF) for the purpose of mutual help and payment of eligible claims.


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There are so many types of Takaful out there. Where do I start?


In general, Family Takaful can be broadly categorised into:

  • Traditional Takaful
  • Investment-Linked Takaful
  • Medical and Health Takaful


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What are the key considerations in participating in a Family Takaful plan?


Your Takaful agent will usually conduct a Customer Fact Find with you to determine your needs, preferences, and budget. Here is a simple checklist to get you started.

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Risks that you wish to cover

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While Family Takaful plans generally cover death, some plans cover more specific risks such as the early onset of a critical illness, accidental death, and partial disability.


Your financial goals

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Your goals can be as specific as legacy planning for your children or saving for your retirement years. These goals should have specific time frames or investment horizons.


Your desired protection level

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This is generally based on many factors including:

  • How many dependents you have (e.g. retired parents, spouse, children)
  • Your outstanding long-term financial commitments (e.g. housing financing, education fund)
  • Your current lifestyle/standard of living
  • Your current savings and investment assets
  • Projected cost of expenses in the future based on currency valuation and inflation (e.g. an education degree at a private university today may cost 50% more years down the road)


Your budget

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The amount that you can set aside for Family Takaful after deduction of expenses, commitments and savings.


Your risk appetite

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You need to consider your risk appetite if you plan to participate in an investment linked Takaful plan. Knowing your protection purpose will also help you decide if you should invest conservatively or otherwise.


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TRADITIONAL TAKAFUL


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What does traditional Takaful offer?

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Traditional Takaful offers protection/coverage with contributions that are payable throughout the duration of the Takaful certificate. The benefits payable are guaranteed, although some plans also offer non-guaranteed benefits such as cash bonuses.


What types of traditional Family Takaful are available in the market?

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Term Takaful which provides coverage for only a fixed period of time, ranging from 5 years to 30 years or more. Since there is no savings or investment feature, no cash value is payable if the certificate is terminated prematurely. Upon death or Total and Permanent Disability (TPD) of the person covered during the certificate term, or at the end of the certificate term, the certificate will pay out the sum covered or offered from the contributions paid (depending on the product features). It is a cheaper alternative compared to the other Takaful plans.

Long-Term Savings Takaful offers coverage and savings for a fixed period of time. A lump sum benefit is payable at the end of the certificate term or upon Death or Total and Permanent Disability (TPD) of the certificate owner or person covered during the certificate term. Some Long-Term Savings Takaful certificates may also pay out a guaranteed cash benefit yearly throughout the certificate term, provided the certificate owner or person covered lives until the end of the certificate term.


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INVESTMENT-LINKED TAKAFUL


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How is investment linked Takaful different from traditional Takaful?

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Unlike traditional Takaful, an investment linked Takaful plan is flexible as it allows you to adjust the protection and investment levels according to your needs and goals.


What types of investment-linked Family Takaful plans are available in the market?

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Regular Contribution Investment-Linked Takaful provides long-term coverage and the opportunity to grow your investments. A lump sum benefit is payable upon death or Total and Permanent Disability (TPD) of the person covered during the certificate term, or upon maturity of the certificate. Generally, the lump sum benefit payable includes the sum covered and the total investment value of your certificate.

Single Contribution Investment-Linked Takaful is designed primarily for investment purposes. These type of plans may not offer as much coverage as regular contribution investment linked Takaful plans, but the contribution allocation rates are much higher.


What does “contribution allocation rate” mean in an investment-linked Takaful certificate?

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This refers to a percentage of the contributions paid that is set aside for investment into the investment-linked funds of your choice.


How can I customise my investment-linked Takaful certificate to suit my needs and goals?

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Unlike traditional Family Takaful plans, investment linked Takaful plans offer the flexibility to increase or decrease your coverage level (e.g. your sum covered) at any time throughout the duration of the certificate subject to underwriting.


Are the returns on investment-linked funds guaranteed?

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No. The returns on investment linked funds are not guaranteed. This is because the price of the fund units may rise or fall depending on the market value of the fund.


Do I have to surrender my investment-linked Takaful plan if I decide to change the investment fund?

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No. It is not advisable to surrender your existing Takaful plan if you decide to change the investment fund. This is because you may get less than what you have invested due to fees and charges. What you can do is to switch funds and most Takaful companies allow one switch per year without any fee. However, for additional switches, you may be charged a processing fee.


Can I increase my investment?

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Yes. You are allowed to top up your existing investment-linked Takaful plan at any time. The “top-ups” are normally used to enhance the investment portion of both single and regular contribution plans without any change in the Takaful coverage. You can also increase the coverage for death, critical illness, hospitalisation, accident, and others.


How long should I hold my investment-linked Takaful plan?

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There is no fixed period of time for you to hold on to your investment-linked Takaful plan. It is like a savings account in a bank or a unit trust in which you may decide on the duration of holding onto your plan. However, it is not advisable to hold the plan for a short period of time in view of the high initial costs.


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MEDICAL AND HEALTH TAKAFUL


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What is medical and health Takaful?

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Medical and health Takaful covers medical and surgical-related expenses such as the cost of hospitalisation, surgical fees and physician consultation fees. The contribution rates are calculated based on your attained age, gender, occupation, health condition and the selected plan. They are not guaranteed and may be revised from time to time. This is due to the ever-increasing number of medical claims and escalating medical costs.


What are some of the important things to look out for in medical and health Takaful?

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Co-Takaful/deductible

  • Co-Takaful – you pay a percentage of the incurred medical expenses, as stipulated under the terms and conditions in the certificate. However, some plans may set a limit on the Co-Takaful payable. For example: 10% Co-Takaful on the medical bill, up to a maximum of RM500.
  • Deductible – you pay a stipulated amount of the incurred medical expenses, the excess of which will be covered by the Takaful Operator. For example, if your plan has a deductible of RM2,000, it means you will have to pay the first RM2,000 incurred in a medical bill while the company covers the rest. If the medical bill is less than RM2,000, the Takaful Operator does not bear any cost.

Benefits – exclusions and limitations
It is important for you to understand the general exclusions and limitations of a medical and health Takaful certificate. For example, any medical event as a result of a pre-existing medical condition is not covered. Selected illnesses that occur within the first 120 days from the commencement date of the certificate are not covered as well.
Ask your servicing agent to go through the list with you.

Pre-existing medical conditions
Your coverage will be based on the information provided in the proposal form, medical examination report (if required), etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

Contribution Rate
Unlike other types of traditional Family Takaful, the contribution rates for medical and health Takaful are not guaranteed and may be revised from time to time. This is due to the ever-increasing number of medical claims and escalating medical costs. The contributions will also increase as you grow older. Ensure that the contribution payable under the certificate is an amount that you can afford.

List of panel hospitals
Ask your servicing agent for the list of panel hospitals under the medical and health Takaful certificate. It is important that you are satisfied with the coverage provided in your city of residence.

Family vs. individual coverage
Some Takaful Operators offer discounts when you sign up for two or more certificates for your loved ones.


What does “guaranteed renewal” mean in a medical and health Takaful certificate?

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“Guaranteed renewal” means that the Family Takaful Operator guarantees the renewal of the certificate, subject to the terms and conditions specified in the certificate. The contributions payable, however, is not guaranteed nor fixed. In practice, the renewal of the certificate is guaranteed until/unless certain events have occurred, such as:

  • You did not pay your contributions or did not pay them on time
  • You misrepresented a material fact, for example age or a medical condition, during your application
  • You cancelled the certificate
  • The total claims under the certificate have reached the overall limit specified
  • You have reached the age limit for coverage at the point of certificate renewal


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PARTICIPATING IN TAKAFUL CERTIFICATE


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What should I be aware of when I participate in a Family Takaful certificate?

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Deal only with registered agents
Family Takaful agents who are registered with the Malaysian Takaful Association (MTA) are required to pass a Takaful basic examination (TBE) that is conducted by MTA. They can only represent one Family Takaful Operator and provide advice on the products marketed solely by that operator. This restriction, however, does not cover other types of intermediaries such as financial planners (FA) or brokers.
In dealing with a Family Takaful agent, always insist on seeing the agent’s authorisation card that is issued by MTA. You can check the status of the agent via the MTA website. Visit http://www.malaysiantakaful.com.my/Consumer-Zone/Public-Enquiry-on-Agent-Status.aspx for more details.

Know your rights
If you intend to participate in a Family Takaful plan from Family Takaful agents, you can ask for a copy of the Takaful Operator’s service guide. It is a simple checklist detailing the obligations and value-added services that an agent provides at the respective stages: before you participate in a certificate, when you decide to participate in a certificate and during the term of the certificate.

Understand the product well
Do not be tempted by verbal promises or guarantees of high returns. Insist on product-related documents such as Benefit Illustration, Product Disclosure Sheet and/or fund performance reports before committing to participate in a Family Takaful certificate.

Disclose required information
Takaful Operators have put in place an underwriting process to determine what type of risk you are to the Takaful Operator and for the company to decide whether or not to accept the risk.
The risk of death or a critical illness is determined by several factors such as age, gender, lifestyle habits, personal and medical history, occupation, etc. You will probably come across these terms:

Standard Risk – It generally means you do not have any serious medical condition, or you hold a low-risk occupation. You are charged standard contribution rates.

Sub-standard Risk – It generally means you have pre-existing medical condition(s), or you hold a high-risk occupation. As a person with a higher than average risk, you would either have to pay additional contribution (also known as contribution loading) or agree for certain exclusions to be included in your certificate. In some cases, the Takaful Operator may reject your Takaful proposal if they deem you to be a non-coverable risk.
You must truthfully disclose information that is required in the proposal/application form. If you are unsure about disclosing certain information, it is recommended that you disclose it anyway. This includes any information that you may have given to your financial adviser or representative but was not included in the proposal form. The Takaful Operator’s decision to cover you is based on the information provided in the proposal/application form, medical examination report (if required), etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

Practice caution
Make sure that the proposal/application form is filled in properly. Do not sign blank or incomplete forms. If you spot any inaccurate or missing information, ask for the form to be amended immediately. Do not release your identity card or credit card details to someone you do not know or without first clarifying why it is needed.
You are discouraged from passing a cheque to your servicing agent to pay for your Family Takaful contributions. Agents, even honest ones, can forget to pay for your certificate, which may cause your certificate to lapse after the grace period is up. Instead, opt for secure and convenient payment methods such as direct debit deduction.


Can I participate in a Family Takaful certificate directly from the Takaful Operator?

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Family Takaful is traditionally promoted through company-appointed intermediaries such as agents, brokers and bancatakaful partners. As professional financial planners, they are equipped with the relevant knowledge to advise and guide you in your participation of a Family Takaful certificate.

In recent years, Bank Negara Malaysia has mandated all Takaful Operators, through the Life Insurance and Family Takaful Framework, to set up a direct channel for Family Takaful plans. This means that you are given an option to participate in Family Takaful online or over the branch counter. Most Takaful Operators offer simple Family term Takaful plan through direct channels with plans to offer other types of products through direct purchase channels in the future.


Is a Family Takaful benefit illustration a legally binding document?

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A benefit illustration is not a legal document. The legal obligations of a Family Takaful certificate are spelt out in the certificate document.


What if I do not agree to the terms spelt out in the Family Takaful certificate that I have just participated in?

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You can cancel your Family Takaful certificate within the 15-day “free look period” by returning the certificate to the Takaful Operator after you have received the certificate document. The full contributions paid (less any medical fees incurred, if applicable) will be refunded to you.


I spotted a new Family Takaful plan that I like. Can I cancel my current certificate and participate in a new certificate?

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Since participating in a Family Takaful certificate is a long-term commitment, it is not advisable to terminate your certificate early because the surrender value is usually less than the total contributions paid. You might also be charged with a higher contribution if you participate in a new certificate since you are older now. Depending on your health condition, your risk profile may change and the Takaful Operator may not be able to accept you on normal terms of coverage and thus, you may likely have to pay higher contribution for a similar protection provided previously.


What will happen to my Family Takaful certificate if I fail to pay my contribution on time?

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There is a “grace period”, which gives you an additional period of time after the contribution payment due date. During this period, you can still pay your contribution and your certificate will continue to be active. Usually, you are given a grace period minimum of thirty (30) days from the Billing Date, subjected to the company practices. If your Family Takaful certificate has lapsed, you may revive or reinstate it within a period of time and under certain conditions such as the declaration of your state of health at the time of reinstatement.


What do I get if I choose to surrender/terminate my Family Takaful certificate?

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Traditional Family Takaful with Cash Value
Your Family Takaful certificate may acquire a cash value after being in-force for a number of years (normally a minimum of three years). The cash value is the “savings” portion of the certificate. Cash value is accumulated when your contribution payments are more than the tabarru’, so the excess goes into a cash value account to be invested for profit. If you decide to surrender your Family Takaful certificate, the cash value, also known as surrender value, will be payable. You will suffer a loss if you terminate/surrender your certificate before the maturity of the certificate.

Investment-Linked Takaful
When you terminate your investment-linked Takaful certificate, you will receive the investment value of your certificate at the time of termination. As your surrender value payable is calculated based on the market value of the balance of units in your certificate, you may get back more or less than the total contributions paid.


I can no longer afford to pay for my contributions, for one reason or another. What can I do?

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Speak to your servicing agent about the options available.

Traditional Family Takaful with Cash Value
The Family Takaful Operator can often make changes to ensure that your Family Takaful certificate can remain active without further contribution payments. Common option includes conversion of your certificate into paid-up certificate which involves reducing the initial sum covered or reducing the certificate term through utilising the remaining cash value.

Investment Linked Takaful
As a portion of the contributions paid is invested into investment funds of your choice, your investment linked Takaful certificate will accumulate an investment value over time. If the investment value of your certificate is substantial, your certificate will continue to remain active as long as there is sufficient value to pay for the tabarru’, certificate fees and fund management charges, where applicable. However, there is no guarantee as to how long the certificate will remain in-force as the investment value is dependent on the market value of the remaining fund units in your certificate’s investment account.

You may elect to reduce your sum covered in an effort to reduce the Takaful charges and prolong the certificate term.


List of Distribution Channels

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  • Agency
  • Banks
  • Direct Distribution – Online / Branch Walk-In
  • Direct Marketing / Telemarketing
  • Financial Advisers
  • Brokers
  • Post Office


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