Definitions of some of the key terms found in Takaful products and some general concepts of Shari'ah compliant products are listed below:

Insurance in a conventional insurance policy. It is the “sharing” of risk that comes with mutual solidarity and guarantee as opposed to the “transfer” of risk that conventional insurance provides.

Premium in a conventional insurance policy. It is the payment of an amount by a Participant to the Takaful Protection Pool, whether direct, through intermediaries for the purpose of mutual protection and assistance.

In the event that there is a surplus in the Takaful Protection Pool after all expenses have been deducted, than that Net Surplus will be donated to a designated charity or charities. Currently, those charities are; United Nations International Children's Emergency Fund (UNICEF), and/or the International Federation of the Red Cross and Red Crescent Societies (IFRC). The designated charities may be changed from time to time at the discretion of the Wakeel’s Oversight Committee provided such change is approved by the Shari'ah Supervisory Board.

Deductible in a conventional insurance policy. It is the first amount that you have to pay on your own account towards each claim.

An event that gives rise to a Loss as defined in the Policy. Loss means a loss to a Participant that is subject to compensation under the terms and conditions of the Policy.

Arabic for uncertainty. One of three fundamental prohibitions in Islamic finance (the other two being riba and maisir). Gharar involves an unacceptable level of uncertainty or contingency in a contract. The prohibition on gharar is often used as the grounds for criticism of conventional financial practices such as short selling, speculation and derivatives.

Financial services that meet the requirements of the Shari’ah, or Islamic law. While designed to meet the specific religious requirements of Muslim consumers, Islamic banking is not restricted to Muslims: both the financial services provider and the consumer can be non-Muslim as well as Muslim. Also called Islamic banking or Islamic financial services.

An Islamic lease agreement. Instead of lending money and earning interest, ijarah allows the financial institution to earn profits by charging rentals on the asset leased to the consumer. Ijarah wa iqtinah extends the concept of ijarah to a lease and purchase agreement.

Arabic for gambling. One of three fundamental prohibitions in Islamic finance (the other two being riba and gharar). The prohibition on maysir is often used as the grounds for criticism of conventional financial practices such as speculation, conventional insurance and derivatives.

A Mudarabah is an Investment partnership, whereby the investor (the Rab ul Mal) provides capital to another party/entrepreneur (the Mudarib) in order to undertake a business/investment activity. While profits are shared on a pre-agreed ratio, loss of investment is born by the investor only. The mudarib loses its share of the expected income.

A Murabaha is a purchase and resale transaction. Instead of lending money, the capital provider purchases the desired commodity from a third party and resells it at a predetermined higher price to the commodity user. By paying this higher price over installments, the commodity user has effectively obtained credit without paying interest.

A Musharaka is a partnership financing structure where profits are shared as per an agreed ratio whereas the losses are shared in proportion to the capital/investment of each partner. In a Musharaka, all partners to a transaction contribute funds and have the right, but not the obligation, to exercise executive powers in that project, which is similar to a conventional partnership structure and the holding of voting stock in a limited company. This equity financing arrangement is widely regarded as the purest form of Islamic financing.

The net difference that is created in the Takaful fund after all expenses and management fees for the cost of administration have been subtracted.

A document that outlines the terms and conditions under which the operator (Wakeel) and participant of the Takaful Policy agree to the guidelines and principles set forth between the two parties. This document also specifies the particular relationship in place between all participants, operators and administrators and ensures that all transactions that take place are done so according to Shari’ah law and dictates that all investments must be Shari’ah compliant.

The Named Insured (Muwakkil in Arabic) in a conventional insurance policy. The participant is the contributing party to the Takaful policy who is covered through the mutual protection and solidarity of the Takaful policy.

The length of time for which the Takaful protection will be effective.

Added as an endorsement to the Takaful protection policy, it provides an overview of how the operator will conduct the administration of the aforementioned policy so as to ensure it is in compliance with the laws of Shari’ah. The preamble also contains the list of terms and the specific meanings that they have in the context of the Takaful policy versus a conventional insurance policy. Also, this is where the participant will find the disclosure of the operator and participant relationship along with the description of the administrator’s responsibility to the participant in ensuring full Shari’ah Compliance.

An interest free loan from the Wakeel to the Takaful Protection Pool in order to meet any shortfalls that are created in the fund.

Interest generated in a conventional loan. The legal notion extends beyond just interest, but in simple terms Riba covers any return of money on money - whether the interest is fixed or floating, simple or compounded, and at whatever the rate. Riba is strictly prohibited in Islam. Investments made within a Takaful policy always avoid Riba in it its financial transactions.

Islamic law as revealed in the Qur'an and through the example of Prophet Muhammad (PBUH). A Shari’ah compliant product meets the requirements of Islamic law. A Shari’ah board is the committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of Shari’ah compliant products.

An independent professional, usually a classically trained Islamic legal scholar that advises a financial institution on the compliance of its products and services with the Shari’ah, or Islamic law. While some financial institutions consult individual Shari’ah advisors, most establish a committee of Shari’ah advisors (often know as a Shari’ah board or Shari’ah committee).

An act or activity that complies with the requirements of the Shari’ah, or Islamic law. The term is often used in the Islamic banking industry as a synonym for Islamic—for example, Shari’ah compliant financing or Shari’ah compliant investment.

Limit of liability in a conventional insurance policy. The amount shown in the Schedule being the maximum amount that the Risk Fund will pay for any one claim. The Sum Covered must be high enough to cover the cost of rebuilding the Building in the event of an Incident that completely destroys it.

Sukuk is the Arabic name for a financial certificate but can be seen as an Islamic equivalent of a bond. However, fixed income, interest bearing bonds are not permissible in Islam, hence Sukuk are securities that comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. Sukuk is a certificate of equal value representing undivided shares in ownership of tangible assets, usufruct and services or (in the ownership of) the assets of particular projects or investment activity.

Premium in a conventional insurance policy. An Arabic word for donation, gift or contribution. In the Takaful contract, this is the amount contributed for the purpose of participating in Takaful scheme.

Islamic insurance. Structured as charitable collective pool of funds based on the idea of mutual assistance. Takaful protection policies are designed to avoid the elements of conventional insurance (i.e., interest, uncertainty and gambling) that are problematic for Muslims. Takaful literally means mutual protection through co-operative risk sharing. It is insurance that avoids prohibited elements of conventional insurance in accordance with the laws of Shari’ah.

Policy as defined in conventional insurance. The agreement entered into between the operator and the participant(s) for the purposes of Takaful insurance.

The total sum of the Contributions received by the Wakeel from the Participants together with investment returns generated thereon (if any) and which has been established voluntarily for the purpose of mutual protection and assistance of the Participants.

The insurance company who underwrites, administers and manages the Takaful program on behalf of the participants. For the Zayan Takaful Homeowners Program, the Wakeel is Lexington Insurance Company, one of the leading Property & Casualty insurers in the United States.