Mortgage Reducing Term Takaful

Manual and Product Information

1.

July 2006

PRODUCT INTRODUCTION
What is Mortgage Reducing Term Takaful plan?
COMMERCE TAKAFUL BHD has specially designed and introduced a product called
MORTGAGE REDUCING TERM TAKAFUL PLAN for Banks Customers. This product is tailored
to provide Takaful coverage for all Banks Customers who participates under the House
Financing Scheme.

2.

OBJECTIVES OF GROUP MORTGAGE TAKAFUL PLAN

(i)

Recovery of financing, if any, on the pre-mature death or disability of the

Customer without having to resort to duress, thus reducing the risk of bad
debts.

( ii )

No risk of adverse publicity arising from attempts to recover debts from

dependants, during a period of family difficulties.

( iii )

Enhances the caring image for the Customers benefits by incorporating this
plan with Bank Housing Financing Scheme.

In addition, the Participant has the advantage of:-

3.

(i)

Peace of mind to dependant/s without risk of continuing indebtedness or

repossession after the Participants death or if he becomes permanently and
totally disabled.

( ii )

To instill the Takaful principles of cooperation, mutual help and shared

responsibility, should any misfortune happen between Participants in the
plan. Allah Almighty said, And cooperate for the good deeds and piety but
never cooperate for transgression and evil ( Surah Al-Maidah : Verse 2 ).

( iii )

Under the Mudharabah, principles, there is a potential for additional

earnings through profit sharing, if any.

GENERAL FEATURES OF THE PLAN

(i)

Each Participant will pay the Takaful contribution in one lump sum on or before the
Takaful commencement date.

(ii)

Participating is either made compulsory or strongly encouraged to all eligible

Customer, whichever is applicable to the bank.

(iii)

The commencement date for the participation will be based on any of the following
criteria whichever is later: -

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4.

July 2006

(a)

The date when COMMERCE TAKAFUL BERHAD notifies Bank on the

acceptance of the Customers application to the plan; or

(b)

The date of receipt of the required TAKAFUL contribution from Bank.

(iv)

The period of Takaful shall be terminated on the expiry of the agreed original House
Financing Term.

(v)

The Takaful coverage is worldwide and for 24 hours a day.

(vii)

In case of pre-mature death or permanent total disablement which happens before

the expiry of the period of Takaful, settlement of the outstanding balance will be
paid to the Bank on behalf of the deceased or disabled Participant.

(viii)

Each Participant will be issued a copy of the individual Mortgage Takaful Certificate.
Bank shall retain the original copy.

ELIGIBILITY CONDITIONS
All successful Customers shall be eligible to participate under this plan subject to the
following conditions:-

5.

(i)

New and existing House Financing Customers of Bank.

(ii)

The Customers cannot be a corporation or a partnership.

(iii)

Minimum Sum Covered is RM10,000.00 and the amount of the Takaful coverage per
Participant is equivalent to the House Financing amount approved and it reduces
according to the Reducing Sum Covered Table.

(iv)

Minimum age at entry is 18 and maximum age is 55. Financing to be settled before
reaching age of 70.

(v)

The period of Takaful shall range from a minimum of 5 years to a maximum term
not exceeding 40 years.

(vi)

Customers have to fully satisfy the acceptability conditions as specified in item 7.

(vii)

Eligible Customer has to be gainfully employed and actively at work at the time of
applying for the House Financing facility in order to qualify to be a Participant.

BENEFITS
For the purpose of the reference, we are providing these benefits. Accordingly, the Takaful
contribution rates will be adjusted according to the benefits.

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There are 4 benefits available, i.e. :

(i)

TAKAFUL BENEFIT
The level of Takaful benefit payable on death to any Participant during the period of
Takaful is based on the reducing Sum Covered Table. Cause of death shall be due to
either natural or accidental causes.

(ii)

PERMANENT TOTAL DISABLEMENT

For the benefit of the Customers, we have added a special feature in the form of
incorporating PERMANENT TOTAL DISABILITY (to be referred to as PTD) in addition
to the basic cover offered. This benefit only available until attaining age 65 years.
Permanent and total disability (PTD) as used in this clause shall mean disability,
whether caused by accident or diseases or sicknesses, which wholly prevents the
participant from ever again to follow his own occupation or any other occupation for
which he is reasonably suited by training, education or experience, provided,
however, that to determine whether the total disability has become a permanent
one, it must continue uninterrupted for a period of at least six (6) months and
provided that the first day of disablement shall not originate prior to the inception
of the Master Contract.
The occurrence of any of the followings shall be considered as PTD:(a)

Loss of two (2) or more limbs.

(b)

Complete and permanent deafness of both ears, of traumatic

origin.

(c)

Total and irrecoverable loss of sight in both eyes.

(d)

Total paralysis.

(e)

Injuries or illnesses resulting with the Participant being

permanently bedridden.

(f)

Permanent loss of speech of traumatic origin.

The aggregate of any one accident or sickness shall not exceed 100% of the Sum
Covered.
In the event of the permanent and total disability suffered by a participant, the
benefit payable shall be on a lump sum basic based on the outstanding amount as
per the Reducing Sum Covered Table.
(iii) CASH REFUND
The Participant has the right to withdraw from the plan by a written notification to
COMMERCE TAKAFUL BERHAD. In the case of early settlement of the House
Financing, a certain percentage of the Takaful contribution known as Cash Refund,
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shall be payable to the individual participant upon confirmation in writing by Bank

as the Contract holder.
The amount of the Cash Refund payable shall depend upon the following: -

(iv)

(a)

The amount of the Takaful Contribution.

(b)

The Participants attained age at entry.

(c)

The outstanding financing amount at the time of settlement.

PAYMENT AT MATURITY
Upon the maturity of the Takaful Mortgage Certificate, the Participant shall receive
his share of the Net Surplus as determined by COMMERCE TAKAFUL BERHADs
appointed actuary, if any, arising from the Participants Special Account as shown in
the last actuarial valuation by COMMERCE TAKAFUL BERHAD.

6.

SUM COVERED
The Sum Covered at the commencement date of the plan shall be equivalent to the total
House Financing amount approved by Bank.

7.

8.

ACCEPTABILITY REQUIREMENT
(i)

Any person who wishes to become a Participant must submit a prescribed

Application Form duly completed and also supply such other information as may be
required by COMMERCE TAKAFUL BERHAD in writing. The Application Form
submitted and other information supplied by the Participant shall form an integral
part of the Takaful contract between COMMERCE TAKAFUL BERHAD and the
Participant.

(ii)

He/she may also be requested to attend a medical examination by one of

COMMERCE TAKAFUL BERHADs panel of doctors. Other forms of medical
examinations may be required depending on the age of the Participant, state of
health and the house financing amount approved based on the circumstances of
each case as determined by COMMERCE TAKAFUL BERHAD.

(iii)

Fulfillment of other requirements which COMMERCE TAKAFUL BERHAD deems

necessary to be fulfilled by the eligible Customer with regards to the Customers
hobby or habit and occupation. Furthermore, COMMERCE TAKAFUL BERHAD has the
right to request additional Takaful contributions from the Customer or to accept a
Participant who has unfavorable health condition or who is engaged in a hazardous
occupation or avocation.

(iv)

COMMERCE TAKAFUL BERHAD reserves the right to reject any case, which does not
satisfy acceptability requirements.

TAKAFUL CONTRIBUTION RATES

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(i)

July 2006

The Takaful contribution is paid in a lump sum on or before the commencement of

the period of Takaful as specified in the Certificate. The Takaful contribution amount
in respect of the individual Participant shall be determined from the following
factors: a)
b)
c)
d)
e)
f)

Age nearest birthday

House Financing term
Total House Financing amount approved
Mode of disbursement either full disbursement or by progress release by
Bank.
Mode of payment either through cash payment by the participant or finance
by
Additional Takaful contribution may be required in the event of
unsatisfactory health conditions or dangerous occupation or hazardous
pursuits / habits.

In order to provide adequate Takaful coverage, the Takaful contribution rates are
designed for different types of Takaful coverage to suit the individual Participants
requirement. They are as follows:a)

TYPE 0
The Takaful coverage will be equal to the period of financing. It is suitable for
House Financing scheme, which is fully disbursed, and the capital
repayment commences immediately.

b)

TYPE 1
The Takaful coverage equal to the period of financing plus one (1) where the
Group Mortgage Takaful Plan provides full Takaful coverage for the first two
(2) years before it reduces annually. Suitable for House Financing scheme
where the capital repayment commences one (1) year after the approval of
the House Financing.

c)

TYPE 2
The Takaful coverage equal to the period of financing plus two (2) where the
Group Mortgage Takaful Plan provides full Takaful coverage for the first three
(3) years before it reduces annually. Suitable for House financing Scheme
where the capital repayment commences two (2) years after the approval.

d)

TYPE 3
The Takaful coverage equal to the period of financing plus three (3) where
Group Takaful Mortgage Plan provides full Takaful coverage for the first four
(4) years before it reduces annually. Suitable for House Financing Scheme
where the capital repayment commences three years after approval.

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Types of Takaful coverage described by Type 1, 2 and 3 are devised to promote

adequate protection for House Financing, which is disbursed progressively.

9.

(ii)

The Participant may pay Takaful contribution by cheque or other form of fund
transfer but any such Takaful contribution will not be deemed as paid until the
Takaful contribution amount has been actually received into the Bank Account of
the Takaful fund managed by COMMERCE TAKAFUL BERHAD.

(iii)

COMMERCE TAKAFUL BERHAD will acknowledge receipt of such Participants Takaful

contributions by issuing receipt signed by authorized officers of COMMERCE
TAKAFUL BERHAD or by issuing a certificate to the bank and participant.

BANK SERVICE FEE

In view of the service rendered by them, Bank is allowed to charge a Bank Service Fee, up
to a maximum of 10% of the Net Single Takaful Contribution.

10.

11.

EARLY TERMINATION
(i)

The Participant has the right to withdraw from the Group Mortgage Takaful Plan
operated by COMMERCE TAKAFUL BERHAD with a written notification to COMMERCE
TAKAFUL BERHAD through Bank.

(ii)

For early settlement of the House Financing amount, the Takaful coverage can be
terminated and a Surrender Benefit known as Cash Refund, shall be payable
directly to the Participant or through Bank. The quantum is further defined in item 5
(iv).

(iii)

Letter of notification from Bank confirming the full settlement of the House
Financing facility.

(iv)

Original copy of the Participants Individual Mortgage Takaful Certificate

ADMINISTRATION
(i)

Upon satisfactory completion of the Application Form and medical acceptability (if
so required), Bank shall be advised on the amount of Takaful contribution required.

(ii)

Upon receipt of the appropriate Takaful contributions, which are derived from the
relevant rates, individual Mortgage Takaful Certificate covering details of each
individuals Takaful coverage shall be issued to each Participant.

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(iii)

July 2006

In the event that Bank fails to remit the Participants Takaful contributions to
COMMERCE TAKAFUL BERHAD following the approval of the Participants
application:
(a) COMMERCE TAKAFUL BERHAD shall be discharged and released from its
obligation to provide the Takaful coverage to those Participants.
(b) COMMERCE TAKAFUL BERHAD shall not be responsible for and will not be liable
to meet all claims arising from the pre-mature death or permanent total
disability of that Participant, if any.

12.

CLAIM PROCESSING
(i)

The benefits payable on the death or disability of the Participant shall be based on
the total outstanding amount as per the Reducing Sum Covered Table.

(ii)

Payments of the Takaful benefits are subject to the following conditions :

(a) That the information and particulars, which the Participant states in the
Application Form, is true and correct. If, it is proven that it is incorrect or he/
she has hidden from COMMERCE TAKAFUL BERHAD any necessary
information at the time of application, the Participant shall not be entitled
for any Takaful benefits.
(b) Misstatement of Age:
COMMERCE TAKAFUL BERHAD shall not pay any Takaful benefit unless the
Participants age has been proved correct. If the age of the Participant has
been miss-stated, the amount of Takaful benefits will be adjusted according
to the correct age.
(c) That the Participant had paid the entire Takaful contribution
required according to the terms and conditions in the Certificate.

(iii)

13.

amount

COMMERCE TAKAFUL BERHAD will not be liable for the payment of any unpaid
installment, which became due for payment before the date of Participants
permanent total disablement or pre-mature death.

DEATH CLAIMS
Documents required for Death claim are :
(a)
(b)
(c)
(d)
(e)
(f)

Written notice to COMMERCE TAKAFUL BERHAD within 30 days of occurrence.

Completion of COMMERCE TAKAFUL BERHADs Death Claim Form.
Certified True Copy of Death Certificate.
Certified True Copy of deceaseds Identify Card.
Original copy of the Deceaseds Individual Mortgage Takaful Certificate.
Police report, if death is due to accident.

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(g)
(h)
14.

July 2006

Offer letter from Bank on the approved House Financing facility.

and any other documents deemed necessary

DISABILITY CLAIMS
Documents required for Disability claim are :
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)

15.

PAYMENT AT EXPIRY OF THE PERIOD OF TAKAFUL

(i)

16.

Written notice to COMMERCE TAKAFUL BERHAD within the period of 30 days from
the date of disability.
Completion of PTD Claims Form by Bank, the Participant and his employer within a
period of 270 days from the date of disability.
Medical attendant(s) report with regard to the disability.
Copy of Participants Identity Card.
Original copy of the Participants Individual Mortgage Takaful Certificate.
Police report if death is due to accident.
Offer letter from Bank on the approved House Financing facility.
and any other documents deemed necessary

The Participant is entitled to his / her share of the Net Surplus, if any, arising from
the Takaful Fund as shown in COMMERCE TAKAFUL BERHAD Actuarial Valuation
immediately preceding the date of expiry of the Participants period of Takaful in
the Certificate.

EXCLUSIONS
(i)

DEATH
The death benefit under this proposed plan shall not be payable if the Participant
becomes disabled directly or indirectly as a result of any of the following causes: (a) willful self injury, suicide or attempted suicide or insanity or abortion or any
complications or resulting there from; or
(b) indulgence in alcoholic drink, misuse of narcotics or drugs; or

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(c) war, invasion, act of foreign enemies, hostilities or warlike operations (whether
war be declared or not), civil war, mutiny, civil commotions assuming the
proportions of or amounting to a popular rising, military rising, insurrection,
rebellion, military or usurped power or any person acting on behalf of or in
connection with any Government or to the influencing of it by terrorism or
violence; or
(d) infection from any Human Immunodeficiency Virus (HIV), Acquired
Immunodeficiency Syndrome (AIDS) or any AIDS related condition or Venereal
Disease; or
(e) sustained whilst the Participant is engaged in activities in contravention of the
Civil or Syariah Law or any assault provoked by him.
(ii)

PERMANENT TOTAL DISABILITY

The permanent total disability benefits under this proposed plan shall not be
payable if the Participant becomes disabled directly or indirectly as a result of any
of the following cause: (a)

War, invasion, act of foreign enemies, hostilities or warlike operations

(whether war be declared or not), civil war, mutiny, civil commotions
assuming the proportions of or amounting to a popular rising, military rising,
insurrection, rebellion, military or usurped power or any person acting on
behalf of or in connection actively directed towards the overthrow by force
of any Government or to the influencing of it by terrorism or violence; or

(b)

Intentional self- inflicted injury whether sane or insane at that time; or

(c)

Sustained whilst under the influence or misuse of alcohol or drugs other

than in accordance with the directions of a registered medical practitioner;
or

(d)

Aviation, gliding or any other form of flight other than as a fare paying
passenger of a recognized airline or charter service; or

(e)

Participating in or training for any hazardous sport or competition or riding

or driving in any form of race or competition; or

(f)

Involvement in any underwater activities necessitating the use of artificial

breathing apparatus; or

(g)

Injury cause by nuclear fission, nuclear fusion or radioactive contamination;

or

(h)

Pregnancy, childbirth or abortion or any complication arising there from; or

(i)

Any disease or medical impairment from which the Participant was suffering
or had a serious past history prior to commencement of the period of
Takaful; or

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(j)

Infection
from
any
Human
Immunodeficiency
Virus,
Acquired
Immunodeficiency Syndrome (AIDS) or any AIDS related condition;

(k)

Sustained whilst the Participant is engaged in activities in contravention of

the civil or Syariah Law or any assault provoked by him; or

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