Know the value of your takaful and insurance in uncertain times

From 1 June 2021, our country returned to the implementation of the Movement Control Order (MCO) following the sudden increase in COVID-19 cases. Those dreaded feelings of concern and worry about the impact of MCO are normal, especially when it involves things outside of our control.

For specific segments of society, their worries are exacerbated with issues like whether their savings are enough to meet their daily needs; what more to allocate part of their savings to continue paying the contributions / premiums for their takaful certificate and insurance policy.

To singletons, you may wonder about the relevance of a takaful or insurance coverage at a time when your health is still in good condition. Perhaps, you may also think that the takaful and insurance benefits provided by your employers are sufficient to protect you until retirement. Or you may be side hustling and freelancing now that you are on your own.

For those with families, you may wonder if a takaful certificate or insurance policy is sufficient to cover your hospital bills and ensure the continued quality of life for your children, who are still dependent on you and your spouse?

We must also be mindful that unexpected incidents can happen to anyone at any time – they are truly not within our control. What is really within our control is how we prepare for such unexpected or unfortunate events.

When you own a takaful certificate or an insurance policy, the protection will help to cover, fully or partly, for example, your hospital bills in a medical emergency, hence, providing a breather in situations when you are low on emergency funds. And in the event of a death, your insurance and takaful benefits will support your next of kin and ensure their livelihood in your absence.

If you already own a takaful certificate or insurance policy, congratulations! You are a savvy financial customer, and in control of your financial journey! Aside from getting to know the benefits covered under your takaful or insurance product, you are advised to find out about the protection provided by Perbadanan Insurans Deposit Malaysia (PIDM) for takaful certificate and insurance policy owners.

The last thing you want to consider is to surrender your takaful certificate or insurance policy if you are facing financial difficulties as a result of COVID-19. By surrendering now, you will be paying more on your contributions / premiums if you decide to purchase one with similar benefits at a later stage in life.

Instead, approach your takaful operator or insurance company to discuss the options that you may have to maintain your takaful or insurance coverage, for example, by paying lower contributions / premiums albeit at lower protection coverage. There are also insurance products that offer lower premiums as a start that will better fit your financial capacity.

In addition, the Life Insurance Association of Malaysia (LIAM) and Malaysian Takaful Association (MTA) announced on 22 June 2021 that all life insurers and family takaful operators have extended the COVID-19 Relief Program on deferment of premium payment and takaful contribution, and additional relief measures to 31 December 2021 for policy and certificate holders who are financially affected by the pandemic. Persatuan Insurans Am Malaysia (PIAM) have also made a similar announcement that all general insurers will continue to offer additional relief measures to affected policy holders until 31 December 2021.

It is encouraging to note that insurance policy holders are well aware of the importance of maintaining their insurance coverage in these uncertain times. The Life Insurance Association of Malaysia (LIAM) reported in March this year that policy holders' persistency rate increased despite the pandemic from 94.5% in 2019 to 95.6% in 2020. Policy holders discontinuing their insurance coverage in 2020 was also the lowest in the last five years.

In this environment of uncertainties and volatilities, it helps to know your options so you can continue to make smart and savvy financial decisions and stay empowered. While we can’t always control the environment, we can definitely control how we react to them. That’s being smart!

PIDM, as mandated under the PIDM Act, protects takaful and insurance benefits up to RM500,000 under the Takaful and Insurance Benefits Protection System (TIPS). In the event a takaful operator or insurance company goes bankrupt, PIDM will ensure that your eligible benefits will continue even when your takaful operator or insurance company can no longer honour the benefits on your takaful certificate or insurance policy.

PIDM's protection is provided automatically and requires no sign ups.

Among the takaful and insurance benefits protected by PIDM include death, permanent disability and disability income, critical illness, healthcare / medical expenses, loss or damage to property, surrender value, maturity value.

PIDM, however, does not protect maturity, surrender and income benefits payable from the unit portion of investment linked certificates and policies.

For the calculation of coverage, and further information relating to the scope and limits of protection under TIPS, visit the PIDM website at
Ivlynn Yap is the General Manager, Communications and Public Affairs, Perbadanan Insurans Deposit Malaysia (PIDM).

Issued in 2021

Click here for Chinese version
Share to