Governing Principles of Takaful and Re-takaful Products
The primary objective of insurance is to facilitate co-operation between two parties, in which one party offers to protect the other party against unexpected peril. In such a scenario, the parties agree that one party will pay a particular premium to the other party, who undertakes to compensate the former in consideration of the paid premium(s) against an accidental loss or injury, which might happen to the subject matter of the contract. In an insurance contract, the party who pays the premium(s) is called the insured or the policyholder, and the other party, who undertakes to compensate against the risk, is known as the insurer. The contract itself is often referred to as the policy. The payment made by the insured is identified as the premium, while the event insured against is usually termed the risk.