In the event that a car
driver dies during an accident, will takaful operator settle the outstanding
financing with the bank besides covering all the costs related to the damage to
the vehicles involved?
There
are at least two different basic takaful coverages involved in the situation as
mentioned in the question namely motor takaful coverage and credit term
takaful. The first takaful falls under
general takaful while the second is under family takaful. In Malaysia, motor takaful coverage
is a compulsory requirement by law for all vehicles to be
on the public road. If the motor takaful
coverage is a comprehensive type, takaful operator will bear all the costs
involved due to the accident subject to the normal limitations and conditions
of the certificate. However, if the
motor takaful is a non-comprehensive type which normally known as third party
type, takaful operator will only bear the costs of losses and damages suffered
by the third party only.
With
respect to the credit term takaful, it is usually an option for the participant
to incorporate with their financing.
Some financial institutions package it together with the financing
facility while many don’t. This credit
term takaful normally covers death and permanent total disability due to any
causes. In the event of death or
permanent total disability, takaful operator will settle all the outstanding
financing balance with the bank. This
product is quite similar to mortgage reducing term takaful (MRTT) except that
the tenure and amount of coverage are much lower.
Thus, if the credit term takaful is in-forced at the time of death due to the accident as mentioned in the question, the outstanding balance of the financing with the financial institution will be settled by the takaful operator accordingly, if the deceased is covered under credit term takaful.
