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General Takaful -Concept and Characteristic, Characters - Coggle Diagram
- General Takaful -Concept and Characteristic
Definition : Provides a sum of money in the event of either movable or immovable property become lost, destroy or damage
b. Non Valuable - this refers to properties that cannot be owned and not recognized by Shariah i.e.. moon, fish, sea
c. Tangible - own physical existence such as house, book, computer . Can be replace by similar quantity and quality
d. Intangible - do not have physical existence such as copyrights, takaful . Cannot be exchange by weight or measurement capacity
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f. Immoveable - properties , land , house, trees
a. Valuable - refers to properties that may be possessed, secured and recognized by Shariah i.e.. house, car
g. Usable - can be used and reused again, car , computer and watch
h. Perishable - no longer exist after the first use, petrol, food, drink and money
i. Cash - gold, silver and currencies
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Risk that can be covered
5. Fortuitous Loss
- must be accidental and unintentional
8. Legal , not against Public Policy and Shariah Compliant
4. Not catastrophic loss
- large no of risk incur same time
- risk result in huge loss
- wars, earthquake, tsunami
7. Reasonable Takaful Contribution
- reasonable to potential loss
3. Pure Risk only
- either suffer loss or no loss
- there is no possibility
- speculative risk hold prospect of loss, break even or profit thus rarely covered
6. Permissible Takaful Interest
- provision in the contract that one party is responsible for any loss or damage to the property and third party liability.
- This principle is the main element to ensure validity of a takaful contract. It also prevents moral hazard among the participants.
2. Law of Large Numbers
- must have large number with similar risk
- to enable TO predict losses more accurately
- if few, losses borne cannot be achieved and cost will be high
1. Financial and economic value
- monetary compensation, involve loss that capable being financially measured and have reasonable economic value
- damage vehicle due to accident, injury to others
Annual / Short Term
- made for period 1yr or less, annual renewal by mutual consent
- contribution charged may vary upon annual review / risk assessment
Payment of claim does not terminate contract
- more than one claim can be made in a yr
Large no of small / partial claims
- very rare extremely large or total claims
Contract of Indemnity
-place participants in same financial position before occurrence of event, subject to max limit takaful coverage
Subject to
- Indemnity - place participants in same financial position before occurrence of event, subject to max limit takaful coverage
- principle permissible Takaful interest - distinguish wager or takaful contract
- utmost good faith - disclose to TO any material change to risk to be covered
- subrogation -claim from 3rd party in respect of loss
- contribution, - if taken from > 1 TO claim will be proportionate to cover same loss
- proximate cause - loss covered by specific peril
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