If the deceased borrower’s account still has a debit balance, LPPSA will issue a debit notice to the borrower’s next of kin. Beneficiaries are required to settle the arrears amount by Electronic Funds Transfer (EFT) as stated in the notice.

If the borrower for joint loan dies, LPPSA will make a claim for compensation from the borrower’s insurance / takaful panel. Compensation received will be taken into account to cover existing financing.

If there is a debit balance after updating, the joint financing partner must pay the debit amount at once. However, if there is a credit balance, the amount will be returned to the couple who are also the heirs of the borrower.

LPPSA will only return the grant and excess credit balance (if any) after the heirs / widows submit one of the following copies of documents:

1. Property Divider Order, Ordinance (Division) of Small Estate, 1985 complete with division of Movable and Immovable Property if the property is worth less than RM 2,000,000; or
2. Court order for property assets worth less than or more than RM 2,000,000; or
3. Letters of Administration ( Letter Of Administration ) issued by the Land Office or the High Court; or
4. Power of Attorney ( Grant of Probate ) issued by the High Court.
The actual owner is subject as stated in one of the documents stated above.
For the return of credit balance, the beneficiary must complete the Excess Loan Claim Form. This form can be downloaded from the LPPSA website.

The scope of protection covered by the Mortgage policy is as follows:

Compensation claims must be submitted directly to the selected insurance / takaful panel.

Borrowers who have been diagnosed with a critical illness and have received a disability pension through an Ex-Gratia claim can submit a claim for compensation to LPPSA to be sent to the insurance / takaful panel by sending the following documents:

1. Disability / critical illness notification form;
2. Letter of application for critical illness compensation by the borrower;
3. Health Report from the hospital; and
4. Retirement approval letter from the Department due to health problems.

LPPSA recommends that borrowers refer to the insurance / takaful panel will make payment of claims if taken to identify the types of coverage covered. If the patient suffers from the conditions set in addition to the medical report certified by the Medical Board, the insurance panel will make a direct payment to LPPSA and the final status will be notified to the borrower after compensation is confirmed by LPPSA in the policy taken by the borrower.

However, if the borrower’s application does not meet the stipulated conditions, the borrower must contact the LPPSA again for pension deduction.