Article (1) – Definitions

Effective from 9/10/2019

The following words and expressions shall bear the meaning indicated beside each of them unless the context indicates otherwise.

State	The United Arab Emirates.
Law	Federal Law No. (6) of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations, as amended.
Executive Regulations	The Executive Regulation of the Law.
Authority	The Insurance Authority established by virtue of the provision of the Law.
Board	Board of Directors of the Authority.
Director General	Director General of the Authority.
Company	The insurance Company incorporated in the State, or foreign branch of an insurance Company, licensed to carry out insurance operations in the State either through a branch or an insurance agent, including Takaful insurance companies.
Insurance Agent	The person qualified by the Company and authorized to practice the insurance business on behalf of it or on behalf one of its branches.
Insurance Broker	The person who independently intermediates in insurance and reinsurance operations between the insurance or reinsurance proposer on one side and any insurance or reinsurance company on the other side and receives for his efforts commission from the insurance company or the re-insurance company with which the insurance or reinsurance has been concluded.
Financial Regulations	Board of Directors’ Decision No. (25) of 2014 Pertinent to Financial Regulations for Insurance Companies and Board of Directors’ Decision No. (26) of 2014 Pertinent to Decision No. (49) of 2019 Pertinent to Regulations for Life Insurance and Family Takaful Insurance. Financial Regulations for Takaful Insurance Companies, as appropriate.
Charges	Amounts or expenses that are considered as part of the premium whether related to expenditures, remuneration or costs, as appropriate.
Actuarial Funding	A method of calculation that a life insurance company can use to reduce the size of the unit reserves it needs to retain in respect of its unit-linked business. The Company effectively capitalizes some or all of the unit-related charges it expects to receive from the units it has nominally allocated, with the funding then being repaid from these future charges as they are received.
Ad-hoc Premium	An additional premium paid to a single premium policy or a non-regular payment for regular premium policies where the payment is over and above the Modal Premium for the purpose of increasing benefits.
Annualized Premium	The Policy Premium that the client has agreed to pay to the Company which covers a period of twelve months.
Actuary	The actuarial expert who is licensed and registered by the Authority and who has been appointed by the Board of Directors of the Company in accordance with the Financial Regulations.
Cash Value	The accumulated value to the policyholder from all sources, including protection and savings, after all standard policy charges are deducted, except for the Surrender Charges, which will be paid to the policyholder upon completion of the Policy Term or upon any termination or conversion which does not generate any Surrender Charges.
Commissions	All amounts paid to the Distribution Channels, including renewal commissions, related to selling and/or maintaining insurance policies. Irrespective of what they are called and how they are paid, these payments must be combined and counted as part of total commissions.
Commission Claw-Back	A recoupment of commissions paid up-front to Distribution Channels when a policy is surrendered prior to a specific period of time. Commission claw-back can also occur in the event of non-payment of premiums or contributions by the client during the initial commission claw-back period.
Policy Churning	Selling an insurance policy to a policyholder which unnecessarily replaces an existing policy, for the purpose of increasing turnover and generating additional commissions.
Credit Life Products	The products that are bundled together with the loans of the existing or new clients of banks or financial institutions. These loans can be, but are not limited to, mortgage, personal, auto, credit card, business, overdraft, etc.
EIBOR	Emirates InterBank Offered Rate.
Explicit Fund Management Charges	The fund management fees, or any other fees related to the invested assets, such as processing fees, etc., which are charged to the policyholder by the Company.
Implicit Fund Management Charges	All fees which are being deducted by the fund manager and/or which are used to adjust the unit price by the fund manager.
Free Look Period	A period of time wherein the policy may be cancelled or surrendered in return for refunding the premium paid.
Illustrations	Detailed projections of policy premiums, charges, surrender values, investment returns over the term of the insurance policy.
Indemnity Commission	A commission up-front or in advance based on the future value of the policy, including the future periods, for which a commission claw-back may apply.
Initial Access Fees	An initial up-front payment(s) made directly or indirectly, such as training costs, to Distribution Channel(s) by a Company as a fee to start a relationship, with or without any policy being sold.
Maturity Benefit	The final Cash Value of the policy at the end of the Policy Term.
Modal Premium	The premium paid on a policy based on the frequency of the premium payments, which could be annual, semi-annual, quarterly or monthly.
Mode of Premium Payment	The frequency in which the policyholder selects to pay premiums. Frequency options are typically annual, semi-annual, quarterly, monthly or single premium.
Net Asset Value	The accumulated value of the invested assets in the policyholder account, after deduction of the Implicit and Explicit Fund Management Charges.
Policy Premium	Includes all regular amounts payable under the policy to the Company which are used for any protection or savings purposes. The payment for a Single Premium Policy would be considered a Policy Premium.
Policyholder Reasonable Expectations	The minimum acceptable level of benefit payout, including options provided, non-guaranteed bonus rates, etc., based on information provided to the policyholder, and any other factors that may shape policyholders’ expectations.
Premium Payment Term	The total number of periods, depending on the Mode of Premium Payment, over which the policyholder must pay the premium.
Protection Benefit	The sum assured, which shall be paid to the beneficiary in the event that a covered peril, such as death, occurred. Such sum assured can be fixed or variable according to the structure of the insurance product. The accumulation of Net Asset Value from investments which are repaid to the policy beneficiary in the event that a covered peril occurred is not part of the Protection Benefit.
Protection Benefit Ratio	A ratio defining the amount of protection coverage included in the value of the insurance policy.
Pure Protection Products	Any product that has a Protection Benefit, but has no Cash Value.
Savings Products	Any product that has a Cash Value would be treated under the umbrella of Savings Products.
Short-Term Products	All products where the policy term is one year or less.
Single Premium Policy	Insurance policy wherein a lump sum is paid as premium at the inception of the insurance coverage.
Surrender Charges	Fees charged to the policyholder, upon early termination, conversion or surrender of a policy, to cover the costs of the early termination of the policy.
Surrender Value / Surrender Benefit	The Cash Value, or benefits, paid to the policyholder, after all Surrender Charges have been deducted.
Long-Term Products	All products where the policy term is over one year.
Unit Linked Product	Insurance plans that provide the option to invest in any number of qualified investments, such as stocks, bonds, mutual funds.
Distribution Channels	Insurance Agents, Insurance Brokers and the marketing of insurance policies through banks or finance companies, as well as, the direct production of the Company through its employees.