General Principles of Takaful Flashcards
STATE ALL GENERAL PRINCIPLES OF TAKAFUL
- Permissible Interest
- Utmost Good Faith
- Indemnity
- Subrogation
- Contribution
- Proximate Cause
- Warranty
- Tabarru’
WHAT DOES IT MEANS BY PERMISSIBLE INTEREST?
Participants must have an interest in the item or life under the takaful protection in that the loss or damage to the item or life would result in a financial loss to the participants.
IN WHAT SITUATIONS PERMISSIBLE INTEREST EXIST?
- Ownership of property
- Potential Legal liability
- Contractual Right
WHAT DOES IT MEANS BY UTMOST GOOD FAITH?
Participants must disclose all the material facts to the takaful operator relating to the takaful contract. Takaful operators must also disclose all related information to participants.
WHAT DOES IT MEANS BY INDEMNITY?
Takaful operators are responsible to pay the participant based on losses on behalf of other participants.
WHAT DOES IT MEANS BY SUBROGATION?
Channel your takaful to other party because of your fault
WHAT DOES IT MEANS BY CONTRIBUTION?
takaful participant subscribe to the same takaful plan from different companies, both companies will share the cost.
WHAT DOES IT MEANS BY PROXIMATE CAUSE?
A claim will be met if the fact for which a claim is brought is the results of the proximate cause included in the perils insured against, or that its liability will be excluded if the proximate cause was an excluded peril.
EXPLAIN WARRANTY
Participants will guarantee each other. Not takaful company.
WHAT IS TABARRU’?
Donation - participants payment into takaful funds
WHAT IS UNDERWRITING?
It is a process of selection through which the takaful underwriters determines which of the risks offered should be accepted and if so, on what terms, conditions and rates.
