MRTA Standard Cases Through TN Banking Unit

Mortgage Reducing Term Takaful

Manual and Product InformationJuly 2006

1.PRODUCT INTRODUCTIONWhat 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:-

( 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.

3.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: -

(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.

4.ELIGIBILITY CONDITIONSAll successful Customers shall be eligible to participate under this plan subject to the following conditions:-

(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.

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

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, 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: -

(a) The amount of the Takaful Contribution.

(b) The Participants attained age at entry.

(c) The outstanding financing amount at the time of settlement.

(iv)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 COVEREDThe Sum Covered at the commencement date of the plan shall be equivalent to the total House Financing amount approved by Bank.

7. 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.

8. TAKAFUL CONTRIBUTION RATES(i)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) Age nearest birthday

b) House Financing term

c) Total House Financing amount approved

d) Mode of disbursement either full disbursement or by progress release by Bank.

e) Mode of payment either through cash payment by the participant or finance by

f) 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.

Types of Takaful coverage described by Type 1, 2 and 3 are devised to promote adequate protection for House Financing, which is disbursed progressively.

(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.9.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.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

11. 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.

(iii) 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 amount required according to the terms and conditions in the Certificate.(iii) 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.

13.DEATH CLAIMS

Documents required for Death claim are :

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

(b)Completion of COMMERCE TAKAFUL BERHADs Death Claim Form.

(c)Certified True Copy of Death Certificate.

(d) Certified True Copy of deceaseds Identify Card.

(e)Original copy of the Deceaseds Individual Mortgage Takaful Certificate.

(f)Police report, if death is due to accident.

(g) Offer letter from Bank on the approved House Financing facility.

(h) and any other documents deemed necessary

14.DISABILITY CLAIMS

Documents required for Disability claim are :

(a) Written notice to COMMERCE TAKAFUL BERHAD within the period of 30 days from the date of disability.

(b) Completion of PTD Claims Form by Bank, the Participant and his employer within a period of 270 days from the date of disability.

(c) Medical attendant(s) report with regard to the disability.

(d) Copy of Participants Identity Card.

(e) Original copy of the Participants Individual Mortgage Takaful Certificate.

(f) Police report if death is due to accident.

(g) Offer letter from Bank on the approved House Financing facility.

(h) and any other documents deemed necessary

15.PAYMENT AT EXPIRY OF THE PERIOD OF TAKAFUL

(i)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.16.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

(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

(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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