> GlossaryThis section has been introduced to provide users with help on some common Takaful terminology. We could add words to this glossary based on your comments and suggestions.
Applicable Charges
The charges which are applicable to a membership/policy for continuing the plan during the term.
Assignment
Transferring the rights and privileges of the Membership to a new assignee, based on the written evidence of change of the assignee which is satisfactory to the Window Takaful Operator
Basic Cash Value
Bid Value of all the Units Allocated to the PIF (Participants Investment Fund) from payments of Regular Contributions.
Beneficiary
Person to whom the proceeds of a Takaful Membership are payable when the Participant dies.
Cede
To transfer a Takaful Risk from the Participant Takaful Fund operated by the Company originally issuing the policy to the fund of another Takaful Company known as the retakaful.
Claim
Notification to a Takaful Operator that payment of an amount is due under a contract of Takaful arising from occurrence of a covered event.
Claims Ratio
The ratio of net claims incurred to earned contributions.
Commission
Remuneration to Takaful intermediary for services such as distributing and servicing of Takaful products.
Concealment
Failure of the takaful operator to disclose to the company a fact crucial/critical to the acceptance of the risk at the time application is made.
Contributions
Monetary contribution paid as lump sum or periodically by a Participant to a Takaful Operator for the purpose of obtaining Takaful Benefits
Death Benefit
The amount payable in case of death of the Participant .
Disability Claim
Takaful claims paid to the participant in case of a defined disability during the term of Takaful.
Exclusions
The terms and conditions which are excluded from the Takaful Benefit/policy.
Extended Term Takaful
After the payment of few years’ Regular Contributions, the Participant will have the option of stopping the payment of Regular Contributions and continuing the Sum Covered of the Plan, so long as there are enough Units in PIA to pay the Takaful Donation into the IFPTF.
Free Look Period
A period of certain days(pre defined in the Participants Membership Document) from the Commencement Date, during which the Participant may opt to cancel the Membership.
Fund Acceleration Contributions
Optional lump sum contribution which can be paid to boost the cash values in PIA
Gharar
Arabic word for uncertainty. One of three fundamental prohibitions in Islamic finance (the other two being Riba and Maisir). Gharar involves an unacceptable level of uncertainty or contingency in a contract. The prohibition on gharar is often used as the grounds for criticism of conventional financial practices such as short selling, speculation and derivatives.
Grace Period
Period of time after the due date of a contribution during which the policy remains in force without penalty.
Gross Contribution
Total contribution of the company for all takaful lines of business including Individual Family Takaful new business, Individual Family Takaful renewal contributions, Group Family Takaful business and Single Contribution.
Group Family takaful
Family takaful (usually without medical examination) on a group of people under a master certificate. It is typically issued to an employer for the benefit of employees, or to members of an association.
Halal
In Islam, there are activities, professions, contracts and transactions that are explicitly prohibited (haram) by the Quran or the Sunnah. All other activities, professions, contracts and transactions are halal.
Haram
Activities, professions, contracts and transactions that are explicitly prohibited by the Quran or the Sunnah.
Hemayah
The brand name of company’s Window Takaful Operations. Hemayah is an Arabic word that signifies protection that is offered by EFU Life’s products.
Hibah
Gift
Ijarah
An Islamic lease agreement.
Individual Family Participants Takaful Fund
The collective fund under the EFU Family Takaful Waqf Fund into which all Individual Family Takaful Contributions are pooled.
Individual Family Takaful
A contract that provides takaful benefits payable to an individual upon death/total permanent disability or periodic income to participant upon retirement.
Kafalah
Shariah principle governing guarantees. It applies to a debt transaction in the event of a debtor’s failure to pay.
Maisar
Arabic word for gambling. One of three fundamental prohibitions in Islamic finance (other two being Riba and Gharar).
Maturity Claim
Takaful claim paid to the Participant in case of maturity of the Takaful policy.
Member
A person who is covered under the takaful policy (can include or exclude the participant).
Mortality Table
A statistical table showing the death rate at each age, usually expressed as the number of deaths per thousand.
Mudarabah
A Mudarabah is an Investment partnership, whereby the investor (the Rab ul Mal) provides capital to another party/entrepreneur (the Mudarib) in order to undertake a business/investment activity. While profits are shared on a preagreed ratio, loss of investment is born by the investor only. The mudarib loses its share of the expected income.
Net Claims Incurred
Net claims paid less provisions for outstanding claims beginning of the year plus provisions for outstanding claims at the end of the year.
Net Contribution
Gross contribution less the retakaful contribution ceded.
Net Investment Income
Returns on investments less rates and taxes.
Net Surplus
The net difference that is created in the Takaful fund after all expenses and management fees for the cost of administration have been subtracted.
Nominee
A person or persons appointed by the Participant .
Outstanding Claim
Claims incurred and reported but not paid as on the date of the financial statements.
Paid up
A condition under which no further contributions are payable and the coverage continues, usually for reduced benefits. This may be an automatic condition invoked by the company, if renewal contributions are not paid, or could be a voluntary selection by a Participant.
Participant
A person who participates in a Takaful scheme and to whom Takaful Contract is issued.
Participants’ Investment Fund (PIF)
The unit linked investment fund in which a proportion of the gross contribution is invested. A separate group of assets forming a sub-fund of a statutory fund of a Takaful Operator which is being used as a basis of determination of the benefit payable under Takaful Policies.
Participant Membership Documents (PMD)
The documents detailing the benefits and obligations of a Participant under a Takaful Contract.
Participant’s Specific Schedule (PSS)
The schedule which states the Membership details specific to a particular Participant/policy.
Participant Takaful Fund (PTF)
It is a sub fund of a statutory fund into which participant’s risk related contributions are paid and risk related benefits are paid out.
Qard
Loan.
Qard-e-Hasna
An interest free loan from the Wakeel to the Takaful Protection Pool in order to meet any shortfalls that are created in the fund.
Reinstatement
Putting a lapsed membership back in force by paying any past-due contributions required.
Retakaful Contribution
Contributions paid to other Takaful companies pursuant to the retakaful agreements mainly for the purpose of diversification of risksof high value memberships.
Retakaful Treaty
A retakaful contract under which a ceding takaful operator has the option to cede and the retakaful operator has the option to accept or decline individual risks.
Retention
The part of Takaful risk that the retakaful retains before passing on the excess to a retakaful.
Riba
Interest generated in a conventional loan. The legal notion extends beyond just interest, but in simple terms Riba covers any return of money on money – whether the interest is fixed or floating, simple or compounded, and at whatever the rate. Riba is strictly prohibited in Islam. Investments made within a Takaful policy always avoid Riba in its financial transactions.
Rider
Strictly speaking, a rider adds something to a policy. However, the term is used usually to refer to any supplemental agreement attached to and made a part of the policy.
Shariah
Islamic law as revealed in the Qur’an and through the example of Prophet Muhammad (PBUH). A Shari’ah compliant product meets the requirements of Islamic law.
Shariah Advisor
An independent professional, usually a classically trained Islamic legal scholar that advises a financial institution on the compliance of its products and services with the Shari’ah, or Islamic law.
Shariah Compliant
An act or activity that complies with the requirements of the Shari’ah, or Islamic law.
Statutory Fund
A fund that is established in the records of a Takaful company and which relates solely to the family takaful business of takaful operator or a particular part of that Takaful business.
Sum At Risk
Amount payable from the PTF in case of death of the participant.
Sum Covered
The amount shown in the schedule being the maximum amount that Takaful Operator will arrange to pay for the settled claim.
Surplus in Waqf Fund
The excess of assets over liabilities in Waqf Fund/Participants’ Takaful Fund (PTF). Negative surplus would be named as ‘Deficit’ in Waqf Fund.
Surrender Claim
Takaful claims paid to the covered person in case an takaful policy is terminated before end of its term.
Tabarru Donations
In the Takaful contract, this is the amount contributed for the purpose of participating in Takaful scheme.
Takaful
Islamic insurance.
Takaful Accidental Death and Dismemberment
Takaful providing payment if the participant’s death results from an accident or if the participant accidentally severs a limb above the wrist or ankle joints or totally and irreversibly loses his/her eyesight.
Takaful Account
An initial account where the Regular Contribution paid by the participant will be divided and allocated to the IFPTF, WTO fund and the PIF, net of any related charges.
Takaful Operators Fund
A fund set by WTO which shall undertake all transactions which the operator undertakes other than those which pertains to PTF/PIF fund setup for the WTO.
Takaful Policy
The agreement entered into between the operator and the participant(s) for the purposes of Takaful coverage.
Takaful Policy Term
The length of time for which the Takaful protection will be effective.
Takaful Proposal Form
The initial application form for Takaful Plan filled by a prospective participant. This form requires details such as name, address, occupation, financial worth, medical history etc and is the basis of Takaful contract.
Underwriting Profit/loss
Earned contribution income less net claims incurred, commissions and management expenses.
Unearned Contribution Reserves
Contributions already received in respect of risks which are still unexpired at the end of the accounting period.
Unit
A share in the net value of the assets of the PIFin the specified Fund as determined by the Window Takaful Operator.
Waiver of Contribution
Takaful policies exempting the Participant from paying contribution after he or she has been disabled for a specified period of time, usually six months.
Wakala Fee
The fee that takaful operator charges for the management of Waqf Fund or acting as a Wakeel (Manager of PTF or PIF).
Wakeel
The Takaful Operator who underwrites, administers and manages the Takaful program on behalf of the participants.
Wakil
Agent
Window Takaful Operator
The Registered insurer authorized by the Commission to carry on both Takaful and conventional business.
