Underwriting, Risk Assessment and Claims in Family Takaful
This domain tests how the operator decides whether to accept a risk, on what terms, and how a claim is assessed. The central duty is disclosure of material facts. Underwriting protects the risk pool so that participants who conceal risks do not unfairly burden others.
Underwriting rules
- The proposal asks about age, health, family history, occupation, hazardous activities, existing cover and income. Answers must be complete and accurate.
- Medical underwriting may require a medical examination, reports or tests; non-medical limits apply by age and sum covered.
- Financial underwriting checks that the sum covered is proportionate to income and need, reducing anti-selection and moral hazard.
- The operator may accept at standard terms, impose loadings or exclusions, postpone, or decline. Large or unusual risks may be shared through retakaful.
Claims
- The claimant notifies the operator, submits proof of death or disability, identity documents, medical evidence and policy documents.
- The operator verifies cover, premium status, disclosures, exclusions, waiting periods and nominee entitlement before paying.
- A material non-disclosure can lead to repudiation within the contestability period; after that, the policy terms and applicable law govern.
Worked example
An applicant for PKR 5,000,000 cover denies diabetes. The medical report reveals treatment. If the omission is material and the policy is still contestable, the operator may repudiate or adjust the claim. If the condition was disclosed, the operator might have loaded the contribution or excluded complications. Reasoning: the undisclosed fact changed the risk assessment.
Traps
Do not accept a client's assurance that a condition is irrelevant. Do not ignore occupation or hazard questions. Do not promise that a claim will be paid before assessment, and do not overlook waiting periods or exclusions.