IFMP Bancassurance Certification (BAC), Pakistan flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Bancassurance definition

Distribution of insurance or takaful products through a bank's branches, staff and customer base under a commercial arrangement between the bank and a licensed insurer or takaful operator.

Referral model

A bancassurance model where bank staff introduce prospects but the insurer's licensed advisers give advice and complete the sale, limiting the bank's sales-advice liability.

Corporate agency model

A model where the bank acts as an authorised agent for one insurer or takaful operator and its trained staff advise and sell only that provider's products.

Bancassurance joint venture

A structure where a bank and insurer share capital, governance and profit in a dedicated entity, aligning incentives while requiring arm's-length pricing and conflict management.

Trail commission

Ongoing renewal commission paid to the distributor as a percentage of renewal premiums, rewarding persistency rather than only new-business volume.

Persistency

The proportion of policies that remain in force and continue paying renewal premiums; low persistency signals misselling or affordability problems and reduces distributor income.

Term assurance

A pure protection life policy paying a death benefit if the insured dies within the policy term, with no maturity or investment value if the term expires.

Endowment policy

A life insurance plan paying a stated sum on death or on survival to maturity, combining protection with a savings element over a fixed term.

Unit-linked policy

An insurance plan where part of the premium buys units in an investment fund; the policyholder bears investment risk and pays disclosed charges such as fund management and allocation fees.

Annuity

A contract converting a lump sum into regular income, either starting immediately or at a chosen future date, and payable for life or a fixed period.

Wakalah takaful model

A takaful arrangement where the operator manages the participants' risk fund as an agent for a fixed fee, and any surplus is shared as agreed in the contract.

Mudarabah takaful model

A takaful arrangement where the operator shares in the profit generated from the participants' fund under an agreed profit-sharing ratio rather than a fixed fee.

Credit-life cover

Insurance linked to a bank loan that repays the outstanding balance or a stated sum if the borrower dies, commonly sold alongside mortgages and personal loans.

Free-look period

A cooling-off window after receiving the policy document during which the policyholder may cancel and receive a refund according to the policy terms.

Insurance Ordinance 2000

The principal Pakistani statute under which the SECP licenses and supervises insurers and takaful operators, covering solvency, conduct and policyholder protection.

SECP role

The Securities and Exchange Commission of Pakistan regulates insurance and takaful, issuing rules on licensing, solvency margins, Shariah governance and market conduct.

SBP role

The State Bank of Pakistan regulates banks, setting rules on agency arrangements, outsourcing, branchless banking and AML/CFT that govern how banks distribute insurance.

Solvency margin

The minimum excess of an insurer's admissible assets over its liabilities required by SECP rules, ensuring the insurer can meet policyholder obligations.

Shariah governance

The requirement under SECP Takaful Rules for a Shariah adviser or board to approve products and contracts, with participant and shareholder funds kept separate.

AML Act 2010

Pakistan's anti-money-laundering statute imposing customer due diligence, record-keeping and suspicious-transaction reporting duties on financial institutions, including banks and insurers.

Customer due diligence

Identifying and verifying a customer and beneficial owner, understanding the source of funds and purpose of the relationship, and keeping records of the checks.

Enhanced due diligence

Additional scrutiny applied to higher-risk customers such as politically exposed persons, non-residents and cash-intensive businesses, including source-of-wealth verification and closer monitoring.

Politically exposed person

An individual entrusted with prominent public functions, or their close associates and family, who presents higher money-laundering risk and requires enhanced due diligence.

Suspicious transaction report

A report filed with the Financial Monitoring Unit when a transaction is suspected of laundering or terrorist financing; the customer must not be tipped off.

Tipping off

Disclosing to a customer that a suspicious transaction report has been or may be filed, which is an offence under anti-money-laundering law.

Fact-find

A structured record of a customer's income, expenses, dependants, liabilities, existing cover, savings and risk tolerance used to establish insurance needs.

Needs-based selling

Recommending a product only after quantifying the customer's protection gap and matching cover, term and premium to the documented need and affordability.

Suitability assessment

Matching a recommended product to the customer's recorded risk profile, time horizon, financial capacity and objectives, and documenting the basis of the recommendation.

Protection gap

The shortfall between the cover a customer needs, often based on income replacement or liabilities, and the insurance or takaful cover already in force.

Mis-selling indicators

Warning signs such as promised guaranteed returns, pressure to sign immediately, hidden charges, or presenting insurance as a bank deposit.

Commission disclosure

Telling the customer how the adviser or bank is remunerated for a sale, so the customer can judge whether advice may be influenced by incentives.

Third-party premium payment

A premium paid by someone other than the policyholder, which requires scrutiny and documentation because it can mask laundering or undisclosed beneficial ownership.