Name | Definition |
---|---|
Amanah | Reliability, trustworthiness, loyalty honesty. |
Average clause | Stipulates that a Takaful fund is only liable for such proportion of the loss as the sum covered bears to total value at risk. |
Name | Definition |
---|---|
Bay Al Salam | Future delivery. |
Bay' al 'Inah | Sale and buyback. A seller immediately buys back the asset he has sold on a deferred payment basis at a price that is higher than the original price. This can be seen as a loan in the form of a sale. |
Bay' al Arboon | Deposit-secured sales. |
Name | Definition |
---|---|
Certificate document | An evidence of a contract between a participant and a Takaful operator which sets out the terms and conditions of the particular certificate. |
Claims | Notification to a Takaful operator that payment of an amount is due under the terms of the certificate. |
Claims ratio | The ratio of net claims incurred to earned contributions. |
Contributions | Monetary contribution provided once or periodically by a participant to a Takaful operator for the purpose of investment and Tabarru'. |
Name | Definition |
---|---|
Darurah | Necessity. |
Name | Definition |
---|---|
Earned contribution | Net contributions less provision for reserved for unearned contribution (RUC) at the year-end income plus the RUC at the beginning of the year. |
Excess of loss treaty | A type of reTakaful treaty which provides that the reTakaful operator pays all or a specified percentage of a loss arising from a particular occurrence or event (frequently of a more or less catastrophic nature) in excess of a fixed amount and up to a stipulated limit. |
Expense rate | The ratio of total expenses for the year (including commissions, salaries, etc) to the sum of total contribution income other than single contribution and consideration for annuities. |
Name | Definition |
---|---|
Facultative 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. |
Fard al Kifayah | Socially obligatory duties. |
Fasid | Unsound or unviable or vitiated. |
Fatwa | Religious decree or an authoritative legal opinion based on Islamic law (Shariah) |
Fiqh | Islamic jurisprudence. |
Name | Definition |
---|---|
General Takaful | Protection to participant for losses arising from perils such as accident, fire, flood, liability and burglary. |
Gharar | Uncertainty. |
Gross direct contributions | Contributions on original gross rate charged to clients in respect of direct Takaful business without any deduction for commission or brokerage. |
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. |
Name | Definition |
---|---|
Halal | Lawful, permissible. |
Haq Maliy | Rights on the financial assets. |
Haram | Unlawful, forbidden. |
Hibah | Gift. |
Name | Definition |
---|---|
Ibra' | Rebate/waving of debt. |
Ijtihad | Effort, exertion, industry. |
Incurred but not reported | Losses which have occurred during a stated period, usually a financial year, but have not yet (IBNR) been reported to the Takaful operator as of the date under consideration. |
Indemnity | Restoration to the claimant of a loss by payment, repair or replacement. |
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. |
Investment linked | A contract where the certificate benefits ant any time vary according to the value of the Takaful underlying assets at the time. |
Istisna' | Advance purchase of goods or buildings. This type of financing, along with Salam, is used as a purchasing mechanism and Marabahah and Bai Bithaman Ajil are for financing sales. |
Name | Definition |
---|---|
Ju'alah | Stipulated price for performing a service. Applied by some in Islamic banking. Bank charges and commission have been interpreted to be Ju'alah by the jurists and thus considered lawful. |
Name | Definition |
---|---|
Kafalah | Guarantee |
Name | Definition |
---|---|
Loan (with service charge) | Some islamic banks provide loans with service charges. The Council of the Islamic Fiqh Academy has resolved that it is permitted to charge a fee for loan-related services offered by an Islamic bank, provided that the fee relates to service expenses. The service charge can only be calculated accurately after all administrative expenditure has been incurred (at the end of the year). However, it is permissible to levy an approximate charge on the client, and then reimburse/claim the difference when the actual expenses are known. |
Name | Definition |
---|---|
Maysir | Gambling |
Medical and Health | A contract that provides specified medical treatment benefits such as the cost of hospitalisation, Takaful surgical and physician consultation fees against risks of a person being diagnosed with certain illnesses or suffering injury as the result of an accident. |
Mortality table | A statistical table showing the death rate at each age, usually expressed as the number of deaths per thousand. |
Mu'amalat | Economic transaction |
Mudarabah | Trust financing, profit sharing The investor has no right to interface in the management of the business, but he can specify conditions that would ensure better management of his money. In this way, Mudarabah is sometimes referred to as a sleeping partnership. A join Mudarabah can exist between investors and a bank on a continuing basis. The investors keep their funds in a special fund and share the profits before the statege of final settlement. Many Islamic investment funds operate on the basis of joint Mudarabah. |
Mudarib | Entrepreneur in a Mudarabah contract |
Muqasah | Debt settlement by a contra transaction. |
Murabahah | Cost-plus financing The price includes a profit margin agreed by both parties. Repayment, usually in instalments, is specified in the contract. The legality of this financing technique has been questioned because of its similarity to riba. However, the modern Murabahah has become the most popular financing technique among islamic banks, used widely for consumer finance, real estate, the purchase of machinery and for financing short-term trade. |
Musharakah | Joint venture, profit and loss sharing All partners to a Musharakah contribute funds and have the right to exercise executive powers in that project, similar to a conventional partnership structure and the holding of voting stock in a limited company. This equity financing arrangement is widely regarded as the purest form of Islamic financing. The two main forms of Musharakah are: Permanent Musharakah and Diminishing Musharakah. Under the former, an Islamic bank participates in the equity of a project and receives a share of the profit on a prorated basis. The length of contract is unspecified, making it suitable for financing projects where funds are committed over a long period. Diminishing Musharakah: This allows equity participation and sharing of profits on a pro-rated basis, and provides a method through which the bank can keep reducing its equity in the project, ultimately transferring ownership of the asset to the participants. The contract provides for payment over and above the bank's share in the profit for the equity held by the bank. Simultaneously the entrepreneur purchases some of the bank's equity, progressively reducing it until the bank has no equity and thus ceases to be a partner. |
Name | Definition |
---|---|
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 contributions | Gross contributions less all reTakaful contributions payable |
Net investment | Income returns on investments less rates and taxes. |
Nisab | Exemption limit |
Name | Definition |
---|---|
Participant's account | An account to credit a portion of contributions from the participant for the purpose of investment/savings. |
Participant's special | An account to credit a portion of contributions from the participant for the purpose of Tabarru'. |
Proportional treaty | A contract under which a Takaful operator and a reTakaful operator participate proportionately in the contributions and losses on every risk that comes within the scope of the contract. |
Name | Definition |
---|---|
Qard | Loan |
Qard Hasan | Benevolent loan Most Islamic banks provide interest-free loans to customers who are in need. The Islamic view of loans (qard) is that there is a moral duty to give them to borrowers free of charge, as a person seeks a loan only if he is in need of it. Some Islamic banks give interest-free loans only to the holders of investment accounts with them; some extend them to all bank clients; some restrict them to needy students and other economically weaker sections of society; and some provide interest-free loans to small producers, famers and entrepreneurs who cannot get finance from other sources. |
Qimr | Gambling |
Name | Definition |
---|---|
Rab al maal | Investor in a Mudarabah contract. |
Rahn | Collateral |
ReTakaful operator's | An amount deposited with or retained by a Takaful operator by way of security for performance Deposit by the reTakaful operator of its reTakaful contracts. |
Retention ratio | The ratio of net contributions to gross direct and retakaful accepted contributions less retakaful within Malaysia. |
Riba | Interest In conventional terms, riba and "interest" are used interchangeably, although the legal notion extends beyond more interest. |
Riba al Buyu' | Usury of trade A sale transaction in which a commodity is exchanged for an unequal amount of the same commodity and delivery is delayed. To avoid riba al buyu, the exchange of commodities from both sides must be equal and instant. Riba al buyu was prohibited by Prophet Mohammad to forestall riba (interest) from creeping into the economy. |
Riba al Duyun | Usury of debt Alternatively, an excess amount is imposed on top of the principal if the borrower fails to repay on the due date. More time is permitted for repayment in return for an additional amount. If the borrower fails to pay again, a further excess amount is imposed, etc. |
Rider | An attachment to a certificate that modifies its conditions by expanding benefits. |
Name | Definition |
---|---|
Sadaqah | Voluntary charitable giving |
Salam | Advance purchase |
Shariah | Islamic jurisprudence A "Shariah board" is the committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of Shariah compliant products. A "Shariah adviser" is an independent Islamic trained scholar that advises Islamic institutions on the compliance of the products and services with Islamic law |
Surplus at valuation date | Excess of the Takaful fund carried forward over the actuarial liabilities of a Takaful fund of family Takaful business. |
Name | Definition |
---|---|
Ta'widh | Deliberate delay in payment |
Tabarru' | A portion of participant's contribution for the purpose of mutual help and used to pay claims submitted by eligible claimants. |
Takaful | Mutual guarantee provided by a group of people against a defined risk or catastrophe befalling one's life, property or any form of valuable things. |
Takaful annuity | A contract that provides a stream of periodic income upon retirement for a term dependent upon human life. |
Tawarrug | Reverse Murabahah |
Tijari | Commercial business |
Total loss | A loss of sufficient size so that it can be said there is nothing left of value. |
Name | Definition |
---|---|
Ujrah | Fee |
Underwritting profit/loss | Earned contribution income less net claims incurred, commissions and management expenses. |
Unearned contribution | Contributions already received in respect of risks which are still unexpired at the end of the reserves accounting period. |
Uqud al-Mu'awadhat | contracts of exchange |
Uqud al-Tabarruat | Charitable contracts |
Urbun | Deposit |
Name | Definition |
---|---|
Wakalah | Agency In terms of Takaful operations, Wakalah refers to an agency contract, which may involve a fee for the agent. |
Waqf | Charitable trust |
Name | Definition |
---|---|
Zakat | Religious tax There are two types of Zakat: Zakat al Fitr, which is payable by every Muslim who is able to pay at the end of Ramadan. This is also called Zakat al Nafs (poll tax). Zakat al Maal is an annual levy on the wealth of a Muslim above a certain level. The rate paid differs according to the type of property owned. |