When Perbadanan Insurans Deposit Malaysia – PIDM for short – contacted me about doing a paid collaboration, I was confused. Unlike other sponsored post inquiries I get, PIDM has no products or services to sell. If anything, their services are (1) free and (2) automatic.
Then they told me their reasons. They’re to:
- Promote awareness on PIDM’s protection services so that people are assured that their deposits, takaful and insurance benefits are safe;
- Inform which financial products are protected to prevent scams by unscrupulous parties, and;
- Let people know what they should do IN CASE their banks, takaful and insurance companies go bankrupt (stay calm, see #3).
So apparently – and I didn’t know about this before – there are people out there who scam your family and friends because they don’t know about PIDM?? That is horrible! And this is why PIDM wants to tell the public who they are and what they do!
So I said yes, and together we created this plain-English article about what PIDM does.
#1 – First of all, the Top 5 things about PIDM’s protection that you should know
- There are two protection systems: Deposit Insurance System (abbreviated to DIS) and Takaful and Insurance Protection System (TIPS). The former protects your deposits in the bank, while the latter protects your takaful or insurance benefits.
- Again, both DIS and TIPS are (1) free and (2) automatic. You don’t have to pay anyone. You don’t have to do anything.
- This is meant to protect you in case the banks, takaful and insurance companies you use go bankrupt. Not that the scenario is likely to happen, but IF it does, your money and takaful and insurance benefits are still safe no worries.
- Your deposits are insured up to RM250,000 with banks in Malaysia. IMPORTANT: Different account structures can be protected separately. Go ahead and open different account types to get the max protection amount of RM250,000 for each account. See the example below:
- Your takaful and insurance benefits are protected up to RM500,000 (for death, permanent disability, critical illness, loss or damage of property), up to RM10,000 for disability and annuity income per month, and 100% of expenses incurred for medical expenses. See some example calculations here.
#2 – You DON’T have to pay for PIDM’s protection
Now that you know, walk away from any company or organisation that shill ‘PIDM protection services’. Better yet, notify to the relevant authorities (Bank Negara Malaysia, the police, consumer associations, etc) so they can investigate and if necessary, take action.
#3 – When do you actually need to contact PIDM?
You can contact these fine folks if you need information about what they do, ask what kinds of products are covered or not covered (or see #5), and more.
You DON’T need to contact PIDM if IF the bank/takaful/insurance company you use go bankrupt. Here’s what to do instead:
- Step 1: Stay calm – you don’t need to go to your bank/takaful/insurance company.
- Step 2: Wait for PIDM’s announcements on how, where and when payment will made (in the case of a bank going bankrupt).
- Step 3: Follow the instructions as per the announcements.
- Step 4: Get your money back, live your life as usual.
PIDM will reimburse your deposits as soon as possible to ensure that you will have uninterrupted access to your funds.
#4 – Is your bank and insurer a PIDM member?
A big part of understanding PIDM’s protection is knowing WHO members of PIDM are. If they’re not a member, the products that you have with those financial organisations are not protected.
Here’s the list of member banks.
And here’s the list of insurer members.
Protip: A quick way to check if the company is under PIDM is to look out for the membership sign below at any of their branches.
#5 – Everything that is NOT covered under PIDM (even if your bank/takaful/insurance is a PIDM member)
Your funds are not protected if:
A) They’re deposited into non-member banks, like:
- Investment banks
- Overseas branches of member banks
- Development financial institutions and cooperative banks (like Agro Bank, BSN, etc)
- All non-bank financial intermediaries such as provident and pension funds, co-operative societies, housing credit institutions and building societies which are not supervised or regulated by Bank Negara Malaysia (EPF, etc)
B) You use these types of financial products and services:
- Deposits not payable in Malaysia
- Interbank money market placements
- Negotiable instruments of deposit (NIDs) and other bearer deposits
- Gold-related investment products and accounts
- Unit trusts, shares, stocks
- Repurchase agreements
C) By the way, these takaful and insurance benefits are not protected too:
- Takaful certificates and insurance policies denominated in foreign currencies
- Loss of profit, pecuniary loss incurred due to acts of dishonesty by employees and damage payable for professional negligence
- Investment portion of investment-linked takaful certificates or insurance policies
Note: Just because they’re not covered under PIDM, doesn’t mean they don’t have their own protective measures, too.
#6 – PIDM-approved money hacks
So by now you know that some types of deposits and takaful/insurance benefits are protected by PIDM, and some are not. Here are some tips from PIDM on maximising your protection.
- Always ask your bank or takaful and insurance agents if the financial product you are getting is protected by PIDM. Banks are obligated to tell you if a product is protected. When in doubt, contact PIDM.
- Open multiple types of accounts to get protection up to RM250,000 each. Spread your savings across different banks, split them into conventional and Islamic accounts, open joint accounts – all these will work.
- Even if you have more than RM250,000 in one bank, you can still file a claim to the liquidator to recover your money IF your bank/takaful/insurance provider goes bankrupt.
- Reminder that the ‘if’ really is a big ‘IF’ because banks/takaful/insurance companies going bankrupt is pretty unlikely. But, you know, ‘trust in God, but tie your camel’ and all.
Now that I know more about PIDM, here’s what I’m going to do with the information:
- Keep using more than one bank, just in case;
- Make sure my main savings accounts are always, always with PIDM-protected member banks;
- Not going to panic in case one of them goes bankrupt;
- If I have more than RM250,000 in deposits (I don’t, but InsyaAllah), I’ll open different types of accounts to get every inch of that money protected;
- Factor the max amount protected for insurances I pick into consideration;
- Report anyone who sells ‘PIDM protection services’, because those are probably scams, and I hate scams.
Aside from that, can I just say what an awesome security measure this is for Malaysians? Nice job, Malaysian government. This part, I like.
What do YOU know about PIDM before reading this article?