Introduction to Takaful by Adnan Malik & Karim Ullah

Author:Adnan Malik & Karim Ullah
Language: eng
Format: epub
ISBN: 9789813290167
Publisher: Springer Singapore

Smith is 35 years old and works in a hospital as Head of Administration. He has two sons, John and Alan, and a wife, Karen. He wants to cover (although partially) the financial loss to his family if he dies. He also desires to make some savings and profits as well. Therefore, he takes out a family takaful cover as follows:

Face value: USD 100,000

Annual contribution: USD 12,000

Duration: 15 years

Participant’s age at entry: 35 years

Beneficiary (nominee) = Karen

Based on Person A’s age and the face value, an amount of USD 5000 is added to the participants’ risk account, while the remaining USD 7000 is added to the participants’ investment account.

After contributing for four years in the takaful fund, Smith dies.

Karen, as a beneficiary, makes a claim to takaful operator which processes the claim and pays the beneficiary as follows:

Face value: USD 100,000

Cash value of the allocated units∗: USD 40,000

Now face value is higher than the cash value of accumulated units; therefore, death claim equals to USD 100,000.

The break-up of the payable amount USD 100,000 is as follows: 60,000 is payable from risk account, while 40,000 is payable from the investment account.

∗Each year, the takaful operator allocates units to participants’ investment accounts. The number of units and the rate at which they are calculated depend on the investment performance of the underlying assets.

If the death of the participant occurs after 11 years of taking coverage:

Cash Value = USD 170,000

Face value = USD 1,000,000

Payable claim = 1,000,000

Break-up = 830,000 (from waqf) + 170,000 (from participant investment account or PIA)

830,000 + 170,000 = USD 1,000,000

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.