IFMP Bancassurance Certification (BAC), Pakistan key terms

An arrangement in which a licensed bank distributes insurance or takaful products to its customers, usually under an agreement with one or more insurance companies, so that protection products are sold alongside banking services.

A written contract between a bank and an insurer or takaful operator setting out which products the bank may distribute, the commission payable, the duties of each party and the standards the bank must meet.

A bancassurance arrangement in which bank staff simply introduce interested customers to the insurer, and the insurer's own licensed staff handle advice, needs assessment and the actual sale.

A bancassurance arrangement in which trained bank staff conduct the full sales process, from needs assessment through product recommendation and application completion, acting under the bank's distribution licence.

A distribution approach in which a bank offers products from several competing insurers or takaful operators rather than a single partner, so customers can compare options and the bank must manage conflicts of interest.

The distribution of Shariah-compliant takaful protection through a bank, using cooperative risk-sharing structures instead of conventional insurance, with benefits paid from a pooled fund managed by the operator.

A cooperative, Shariah-compliant protection arrangement in which participants contribute to a shared pool used to compensate members who suffer covered losses, rather than transferring risk to a commercial insurer.

The voluntary donation element of a takaful contribution that participants give to the shared risk pool, making the arrangement a mutual gift rather than a sale of risk.

A fee charged by a takaful operator for managing the participants' risk pool and investments, agreed in advance and deducted from contributions or returns under an agency arrangement.

The amount a takaful participant pays into the scheme, comparable to a premium in conventional insurance but structured as a donation plus a managed investment portion.

Pure protection cover that pays a stated sum to beneficiaries if the insured dies within a fixed period, with no maturity payout if the person survives, making it the lowest-cost life product.

Life cover that remains in force for the insured's entire lifetime and pays the sum assured on death whenever it occurs, often with a savings or cash value element.

A life policy that pays the sum assured on death within the term, or on survival to the end of the term, combining protection with a savings payout.

The amount stated in the policy that the insurer or takaful operator will pay when a covered event occurs, before any deductions, bonuses or outstanding charges.

The savings component built up inside certain life policies that the policyholder may receive on surrender, or borrow against, and that reduces the insurer's net risk.

The person or persons named in a life policy to receive the death benefit, whose nomination should be recorded clearly and kept up to date by the policyholder.

The policyholder's formal instruction naming who should receive policy proceeds on death, which helps ensure the benefit reaches the intended person without dispute.

Optional add-on benefits attached to a base life policy, such as critical illness or accidental death cover, which increase protection and usually increase the premium or contribution.

The insurer's assessment of the risk a proposed customer presents, using health, age, occupation and lifestyle information, to decide whether to accept the risk and on what terms.

Information that would influence an insurer's decision to accept a risk or set its price, which the customer must disclose fully and truthfully when applying for cover.

The principle that both the customer and the insurer must deal honestly and openly, disclosing all relevant facts, because the insurer relies on the customer's information to price risk.

Failure by a customer to reveal information relevant to the risk being insured, which may allow the insurer to reduce a claim or avoid the policy depending on the law and the policy terms.

A set number of days after receiving a policy during which the customer may cancel it and receive a refund, giving time to review the terms without pressure.

A consumer protection window that lets a buyer reconsider a purchase and withdraw, designed to reduce the effect of high-pressure selling at the point of sale.

A structured conversation in which the adviser gathers facts about the customer's income, dependants, existing cover and goals in order to identify the protection gap before recommending anything.

The documented record of a customer's personal and financial circumstances, needs and objectives, which forms the basis for any recommendation and must be kept accurate.

The judgement that a recommended product matches the customer's needs, financial capacity, time horizon and risk appetite, and can be justified from the recorded fact find.

Selling a product that does not meet the customer's needs or that the customer cannot afford, or describing it inaccurately, which breaches conduct rules and can trigger redress.

Telling the customer, in a clear and timely way, what remuneration the bank or adviser will receive from the sale, so the customer can judge whether advice may be biased.

Situations where the bank's or adviser's own gain, such as higher commission on one product, could improperly influence the recommendation given to a customer.

The process of identifying a customer and verifying identity, address and business purpose before opening a relationship, forming the foundation of anti-money-laundering controls.

Ongoing checks on a customer's identity, source of funds and activity, carried out at onboarding and refreshed over the relationship, to confirm the customer is who they claim to be.

Additional, more intensive checks applied to higher-risk customers, such as politically exposed persons or those in high-risk jurisdictions, including scrutiny of source of wealth and funds.

A person entrusted with a prominent public function, or a close associate or family member, who is treated as higher risk and requires enhanced scrutiny before a relationship is accepted.

Evidence explaining where the money used for a transaction or contribution came from, which the bank must obtain to detect possible laundering or terrorist financing.

A confidential report a bank submits to the financial intelligence unit when it suspects funds are linked to crime or terrorism, with tipping off the customer strictly prohibited.

Warning a customer, or anyone else, that a suspicious transaction report has been or may be filed, which is a criminal offence because it can defeat the investigation.

The set of laws, rules and procedures a bank uses to prevent criminals from disguising the proceeds of crime as legitimate funds through the financial system.

The combined laws, rules and circulars issued by the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan that govern how banks may sell insurance and takaful.

Pakistan's central bank, which supervises banks and issues prudential and conduct requirements, including rules on how banks may act as insurance distribution agents.

Pakistan's securities and insurance regulator, responsible for licensing insurers and takaful operators and for supervising insurance conduct, product approval and market standards.