Takaful definitions Questions and Answers

Risk Management - Answer-Identification analysis and economic control of those risks which can threaten the assets or earning capacity of an enterprise. Insurable Interest - Answer-The legal right to insure arising out of a financial relationship, recognised at law, the subject matter of insurance. Insurance Contract - Answer-An agreement, enforceable by law, between two or more persons to do, or abstain from, some act or acts, their intention being to create legal relations and not merely to exchange mutual promises. Applied in insurance this definition may read; An agreement enforceable by law between insurer and insured. Consideration - Answer-Currie v Misa 1985 - Some right interest profit or benefit accruing to one party, or some forbearance, detriment loss or responsibility given, suffered or undertaken by the other. Upmost good-faith - sharia. - Answer-This principle of good faith applies equally across all contracts in Islamic finance and insurance. The Quran states; Allah Almighty, Commands justice, the doing of goods and liberality to kith and kin and he forbids all from shameful deeds and injustice and rebellion. He instructs you that you may receive admonition. Quran 16.90 Utmost good faith, material facts - Answer-Shariah - you must also disclose all material facts they must be transparent and avoid Misrepresentation As Uqba Bin Armir companion of the Prophet Muhammad (PBUH) - explains. It is illegal for one to sell a thing if one knows that it has a defect unless one informs the buyer of the defect. Material fact - conventional - Answer-Taken from the marine insurance act 1906. Every circumstance is material which would influence the judgement of a prudent insurer in fixing the premium or determine whether he will take a risk.What consequences are there if one breach is the duty of disclosure and financial transactions in Islam? - Answer-Quran as Allah says; and cover not the truth with falsehood, nor conceal the truth when you know (what it is) Quran 2.42. The profit (PBUH) says; Whoever sells a defective thing without disclosing it continues to be in the Wrath of Allah and angels continue to curse him proximate cause - Answer-The active efficient cause that set in motion a train of events that brings about a result without the intervention of any force started and working actively from a new and independent source. Principle of indemnity. - Answer-Financial compensation sufficient to place the insured in the same financial position after a loss as they were immediately before the loss occurred. Definition of Takaful - Answer-Takaful Is an Arabic word derived from Arabic terms for guarding each other or sharing. It is variously described as meaning mutual protection, shared responsibility or joint guarantee or responsibility, assurance or surety. Islam and definition of Shariah - Answer-For Muslims Islam is a complete way of life and Shariah is the path that provides the guidance. This day I have perfected your religion for you, and I have completed my blessings upon you and I have approved Islam as a way of life for you (Quran 5.3) Shariah Technical definition - Answer-Commands, prohibitions, guidance, principles and rules derived from the primary sources of Islam:- The Quran, and supplementary teachings of the Prophet Muhammad (PBUH) called the Sunnah. Objectives of Shariah by Amam Al Ghazali - Answer-The objective of Shariah is to promote the wellbeing of all mankind which is safeguarding their - faith (DEEN), Self (NAFS), intellect (A' QAL), posterity (NASL) and their wealth (MAL) Fiqh (jurisprudence) - Answer-A set of codified laws of Shariah which govern human deeds and actions as understood and deduced from the sources of Sharia by highly qualified Muslim Jurists Maslahah -Istislah - Or public interest - Answer-Public interest consists of considerations that secure a benefit but prevent harm, but which are simultaneously harmonious with the objectives of Shariah. These objectives are protecting the five essential values; beliefs, life, intellect, lineage and property.Any measure which secures these values falls within the scope of public interest and anything that violate them is evil and preventing the latter is also public interest. Urf - custom - Answer-Defined by Mohammed Hashim Kamali. Recurring practices which are acceptable to people of sound in nature. Whether general or specific Urf is that which; 1 - Is protected by people of sound mind 2 - Does not contravene principles of shariah 3 - Is observed and upheld in a court of law 4 - Is valid and can form the basis of legal and judicial decisions in Shariah