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Takaful and Insurance Benefits Protection System (TIPS)

Calculation For TIPS

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 insurance policy owner. The aggregation rule is further illustrated in the examples below:

Illustration 1: Mr Lim is employed with Troton Bhd and is insured under his employer’s Group Personal Accident Policy for RM200,000. He also has a Whole Life and an Endowment policy for himself (sum insured of RM300,000 under each policy). All the policies were bought from XYZ Insurance Bhd. In March 2011, he died in an accident.

In the event of failure of XYZ Bhd, the application of the aggregation rule and the payment that will be made to Mr Lim are as follows:

  Group PA Policy Whole Life Policy Endowment Policy
Policy Owner Troton Bhd Mr Lim Mr Lim
Insurer XYZ Insurance XYZ Insurance XYZ Insurance
Risk Event Death Death Death
Life Insured Mr Lim Mr Lim Mr Lim
Aggregation Rule Applies? NO Will be aggregated based on “same insurer, same policy owner, same risk event and same life insured”.
Amount Claimed RM200,000 RM300,000 RM300,000
Amount Protected Under TIPS RM200,000 Capped at RM500,000

Illustration 2: Ms. Liza owns two cars and bought the motor insurance policy for both her cars (ABC 666 & IJK 888) with XYZ Insurance Bhd and had filed the following claims with the insurance company and both the claims had not been settled yet.

Date Event Description Details of Claim
Jan 2010 Ms. Liza’s car (ABC 666) was damaged in an accident Claim 1 - Property damage for RM300,000
Aug 2010 Ms. Liza’s car (IJK 888) was damaged in an accident Claim 2 - Property damage for RM350,000

In the event of failure of XYZ Insurance Bhd, the application of the aggregation rule and the payment that will be made to Ms. Liza are as follows:

  Claim 1 Claim 2
Policy Owner Ms. Liza Ms. Liza
Insurer XYZ Insurance Bhd XYZ Insurance Bhd
Risk Event Damage to property Damage to property
Property Insured Car - ABC 666 Car - IJK 888
Aggregation Rule Applies? NO NO
Amount Claimed RM300,000 RM350,000
Amount Protected Under TIPS RM300,000 RM350,000