Leading Life and Health Insurer and Family Takaful Operator in Pakistan

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Accidental Death and Dismemberment

Insurance providing payment if the insured’s death results from an accident or if the insured accidentally severs a limb above the wrist or ankle joints or totally and irreversibly loses his or her eyesight.

Accidental Death Benefit Rider

A life insurance policy rider providing for payment of an additional benefit related to the face amount of the base policy when death occurs by accidental means.

Acquisition cost

Expenses incurred by the company for acquisition of Insurance/Takaful business. These mainly include expenses relating to the distribution channels.

Administration Expenses

Administrative expenses are costs that relate to regular business operations. All expenses not directly linked to acquiring new business.

Annuities

A series of payments made or received at regular intervals.

Assignment

The transfer of some or all rights of ownership in a policy.

Authorized Share Capital

The maximum value of shares that a Company can issue.

B

Back Dating

The practice of making a policy effective at an earlier date than the present.

Balance Sheet

An accounting term referring to a listing of a company's assets, liabilities and surplus as of a specific date.

Beneficiary

A person to whom the proceeds of a life policy are payable when the insured dies.

C

Cash Value

The cash value of an insurance policy or Takaful contract is the cash amount offered to the policyholder/participant by the life insurer/Takaful operator upon surrender/cancellation/maturity of the insurance policy or Takaful contract, net of any surrender charges.

Cede

To transfer an insurance risk from the Company originally issuing the policy to another insurance company known as the reinsurer.

Claims

The amount payable under a contract of insurance/Takaful arising from occurrence of an insured event.

Commission

Remuneration to an insurance/Takaful intermediary for services such as selling and servicing of insurance/Takaful products

Concealment

Failure of the insured to disclose to the company a fact crucial/critical to the acceptance of the risk at the time application is made

Contribution

Monetary contribution paid as lump sum or periodically by a participant to a Takaful operator for the purpose of obtaining Takaful Benefits

Critical Illness Contract

Illnesses typically covered include cancer, strokes, heart attacks, multiple sclerosis and kidney failure.

D

Death Claim

Insurance/Takaful claims paid to beneficiaries when the insured person/participant dies during the period of insurance/Takaful.

Disability Claim

Insurance/Takaful claims paid to the insured person/participant in case of a defined disability during the periods of insurance/Takaful.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock.

E

Earnings per Share

The portion of the company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Evidence of Insurability

Any statement or proof of a person’s physical condition and occupation affecting acceptance of the applicant for insurance.

Exclusions

Specified hazards listed in a policy for which benefits will not be paid.

Extended Term Insurance Option

An option under which a policy may continue for its full face amount even after premium payments are discontinued. The duration for which coverage is provided under this option depends on the available cash value of the policy.

F

Free Look Period

An individual life insurance provision that grants the insured the right to rescind the insurance contract within a given period after the policy is actually delivered to the insured.

G

Grace Period

Period of time after the due date of a premium during which the policy remains in force without penalty.

Gross Contribution

Total contribution of the Operator for all takaful lines of business including Individual Family Takaful new business, Individual Family Takaful renewal contributions, Group Family Takaful business and Single Contribution.

Gross Premium

Total premium of the company for all lines of business including individual life new business, individual life renewal premium, Group business and single premium.

H

I

Incontestable Clause

Provides that, for certain reasons such as misstatements on the application, the company may void a life policy after it has been in force during the insured’s lifetime, usually one or two years after issue

Insurance

Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.

Insured

The person whose life is insured by a life insurance policy.

Insurer

The Party that provides insurance coverage, typically through a contract of insurance.

Insurability

All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual’s risk profile.

Insurable Interest

A person has an insurable interest in another’s life if he or she can reasonably expect to benefit from that person’s continued life, and, conversely, if he or she would suffer financial loss on the person’s death. This is a basic requirement of a life insurance contract without which the contract is not valid.

J

K

L

Lapse

Termination of a policy upon the policy owner’s failure to pay the premium within the grace period.

Life Expectancy

The average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table.

M

Maturity Claim

Insurance/Takaful claim paid to the insured person/Participant in case of maturity of the insurance policy or Takaful contract.

Medical

A document completed by a physician or another approved examiner and submitted to an insurer to supply medical evidence of insurability (or lack of insurability) or in relation to a claim

Misrepresentation

An untrue statement of a fact.

Morbidity

The relative incidence of disease within a given group.

Mortality

The relative incidence of death within a given group.

Morbidity Tables

These are statistical tables used by life and health insurance companies showing the probability of disease of males and females at all ages.

Mortality Tables

These are statistical table used by life insurance companies showing the probability of death of males and females at all ages.

Mudarib Fee

The fee that the takaful operator charges for the management of the investment of the Waqf fund

N

Net Contribution

Gross contribution less the retakaful contribution ceded.

Net Premium

Gross premium less the reinsurance premiums ceded.

Net Risk Contribution of PTF

The risk related portion of the Participant's contribution paid into the PTF to avail Takaful cover from the PTF.

Non-Medical Insurance

Issued on a regular basis without requiring a regular medical examination. In passing on the risk, the company relies on the applicant’s answers to questions regarding his or her physical condition and on personal references or inspection reports.

O

Outstanding Claims

Claims incurred and reported but not paid as on the date of the financial statements.

P

Paid up

A policy condition under which no further premiums are payable and the coverage continues, usually for reduced benefits. This may be an automatic policy condition invoked by the insurer if renewal premiums are not paid, or could be a voluntary selection by a life assured.

Paid-up capital

The amount paid or contributed by shareholders in exchange for shares of a company's stock.

Participants

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.

Participants' Takaful Fund (PTF)/Waqf Fund

A fund which is a risk pool for Takaful participants. 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.

PAT

Gross profit for the year net of the tax for the year, as mentioned in the Profit and Loss Account.

Pension

A regular annuity payment, generally after retirement, to a person that is intended to allow him to subsist without working.

Policyholders' liabilities

It is the value of the obligation of the insurer to its policyholders. A major portion of this is policyholder reserves, which is the amount representing actual or potential liabilities kept by an insurer to cover policyholders benefits.

Premium

Financial cost of obtaining an insurance cover, paid as a lump sum or in installments during the duration of the policy.

Proposal Form

The initial application form for insurance filled by a prospective life assured. This form requires details such as name, address, occupation, financial worth, medical history etc and is the basis of an insurance contract.

Q

Qard-e-Hasna

In case of a deficit in Waqf Fund, Takaful Operator extends a Qard-e-Hasna (interest free loan) to PTF to cover the deficit. This Qard is repaid to the Takaful Operator from future surpluses in the PTF.

Quota Share Arrangement

A reinsurance arrangement where the total risk is shared between the insurer and the reinsurer in a specified percentage, such as 75%:25% (where the insurer retains 75% of the risk, and the reinsurer assumes 25% of the risk)

R

Rider

Strictly speaking, a rider adds something to a policy. However, the term is used loosely to refer to any supplemental agreement attached to and made a part of the policy, whether the policy’s conditions are expanded and additional coverage’s added, or a coverage or condition is waived.

Reinsurance

The arrangement under which a part of the risk is transferred from the company originally issuing the policy (the insurer) to another insurance company known as the reinsurer.

Reinsurance Treaty

A detailed legal contract defining the reinsurance agreement between an insurer and reinsurer.

Reinstatement

Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

Reinsurance Premium

Reinsurance premiums are premiums paid to other insurance companies pursuant to the reinsurance agreements mainly for the purpose of diversification of risks undertaken by the insurer.

Retakaful Contribution

Retakaful contributions are contributions paid to other Takaful operators pursuant to the retakaful agreements mainly for the purpose of diversification of risks undertaken by the Takaful Operato

Retention

The part of insurance/Takaful risk that the insurer/Takaful Operator retains before passing on the excess to a reinsurer/Retakaful.

Return on Equity

Return on equity measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as: Return on Equity = Net Income/Shareholder's Equity.

S

Shareholders' Fund

A fund that is established in the records of a life insurance/Takaful Operator and which contains that part of the assets and liabilities of a life insurer/Takaful operator which is attributed to it and is not attributed to any statutory fund maintained by that life insurer/Takaful Operator.

Shareholders' Equity

This is the total of Paid-up capital, accumulated surplus and any general reserves.

Solvency

Having sufficient assets-capital, surplus, reserves-and being able to satisfy financial requirements to be eligible to transact insurance/Takaful business and meet liabilities.

Standard Risk

Person who, according to a company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

Statutory Fund

A fund that is established in the records of a life insurer/ Takaful Operator and which relates solely to the life insurance/Takaful business of that life insurer/takaful operator or a particular part of that life insurance/Takaful business

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

Insurance/Takaful claims paid to the insured person/participant in case an insurance policy or Takaful contract is terminated before end of its term.

Sub-Standard Risk

Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.

T

Takaful Operators Fund

A Fund setup by a Window Takaful Operator which shall undertake all transactions which the Operator undertakes other than those which pertains to Participants Takaful Fund/Participant Investment Fund setup for the Window Takaful Operations.

Term Insurance

Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.

Term of Policy

Period for which the policy runs.

U

Underwriting

The process of assessing and selecting risks for insurance/Takaful and classifying them according to their degrees of insurability so that and appropriate price may be assigned. The process also includes rejection of those risks that do not qualify.

Unilateral

A distinguishing characteristic of a life insurance contract in that it is only the insurance company that pledges anything. The policy owner does not even promise to pay premiums; therefore, it is really a one-sided contract favoring the policy owner.

Uninsurable Risk

One not acceptable for insurance due to excessive risk.

V

W

Waiver of Premium

Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.

Wakalah Fee

The fee that takaful operator charges for the management of Waqf Fund or acting as a Wakeel (Manager of PTF).

Window Takaful Operator

A Registered Insurer authorized under Takaful Rules, 2012 to carry out Window Takaful Operations in addition to Conventional Insurance Business.

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