TAKAFUL. Education Savings Plan. Takaful Unit-Linked Savings Plan. twitter.com/alhilalbank. facebook.com/alhilalbank

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1 TAKAFUL Education Savings Plan Takaful Unit-Linked Savings Plan twitter.com/alhilalbank facebook.com/alhilalbank

2 2 3 What is Takaful? Al Hilal Bank Al Hilal Bank is truly a bank like no other. It sets itself apart by making the Islamic banking experience smarter, more personal and a whole lot more exciting. We believe in blending performance with consistency, while always remaining faithful to genuine Islamic values. Our offering features a variety of products and services that cater to all of your financial needs. In other words, Al Hilal Bank puts you at the center of everything it does. Takaful comes from the Arabic verb Kefala, which means taking care of one s needs. Takaful is based on the principles of solidarity, mutual help and brotherhood, as well as cooperation among members or participants. They agree to share the risk of any financial losses, which are paid out of defined resources/assets. This system serves the interests of all participants, and aims to diminish and spread out losses resulting from unforeseen events. Takaful is an alternative to the conventional/western style of insurance. According to its principles, policyholders extend mutual support to each other for their common good, without taking advantage of one another. A portion of each policyholder s contribution is allocated to a solidarity fund, which is used to pay benefits in case of untimely death or accidental injury. This concept is based on Shari ah principles that encourage helping those in need.

3 4 5 The Importance of Education Selecting a contribution amount and level of protection to meet the financial objectives you have set for yourself is a good place to start. One of the main advantages of this plan is the flexibility to choose with regard to the following: How long you want to save for How much you want to save How often you want to pay How you would like to receive the maturity proceeds Increase your regular contributions, and pay additional lump sums at will during the term of the plan. Reductions in regular contributions at any time after the initial period are also possible, provided that the decrease does not fall below the minimum acceptable levels specified in the General Terms and Conditions. There are many important things in life worth saving for. However, a good education is a foundation for success. Life is also full of unexpected events that we have no control over, and parents should not have to live with the fear of not knowing what will befall their loved ones if they were one day unable to provide for them. While financing may help them in the short term, it nevertheless carries with it an obligation to deal with debt repayments later. Because your child s education is one of your biggest responsibilities, we will help you ensure that financial difficulties do not get in the way. Our Takaful Education Savings Plans can help you start early enough to turn dreams into reality. TAKAFUL EDUCATION SAVINGS PLAN Our helps you plan for your child s future. Apart from putting you in the driver s seat, it provides you with an opportunity to enjoy the versatility and protection that you and your family deserve. Among other benefits, you can adjust your plan to suit your changing needs and goals, and make new choices as circumstances change with time*.

4 6 7 During the term of the plan, you may also choose options such as*: Extend your investments after maturity without paying any further contributions. Stop your regular payments and choose a Paid-up option after 18 months, and continue investments of contributions already paid. Make partial withdrawals to pay for school or university ad-hoc expenses. Defer regular contributions of up to 12 months. The takes into consideration the escalating costs of tuition fees and books, and advises all concerned parents to start planning for their children s higher education as early as possible a gift that your child will value forever. It helps you grow an investment fund for use in covering your child s education, and pays out agreed Takaful Death Benefits in case of the covered member s untimely death during the term of the plan. The Takaful Education Savings Plan aims to: Each year, the cost of education rises and in many cases exceeds the rate of inflation. The reality nowadays is that many capable students are finding it increasingly difficult to go to college because of financial limitations. They either look for School Tuition Financing, or struggle to work part-time and finance their rising education costs. The average cost of a 3-year degree at a private college today is as follows: Country/City Expenses Living Grand Total Expenses Canada 144, , ,000 Dubai 120, , ,000 UK 280, , ,000 USA 396,000 90, ,000 Build a comprehensive and systematic saving plan to support your child s education. Grow an investment fund with the option to make partial withdrawals for covering any of your child s unplanned expenses during the course of the plan. Pay out an agreed-upon Family Takaful Benefit in case of an unfortunate event during the term of the plan to the parent (policyholder). Source: Actual survey by Al Hilal Bank s Seghaar Team. Figures quoted in UAE Dirhams. Canada (University of Montreal), Dubai (Middlesex University), UK (Durham University), USA (Princeton University).

5 8 9 PRODUCT FEATURES TAKAFUL EDUCATION SAVINGS PLAN With Dynamic Protection Program Eligibility Open only to AHB account holders aged years at contract start date (not more than 70 years of age at maturity) Tenure Min. 10 years Max. 30 years Payment Mode Monthly or Yearly Contribution mode Payments collected on contract start date (1st of next month) Earning Mode Monthly, Quarterly, Half Yearly, and Yearly Payments. Minimum Contribution Monthly AED 1,000 Takaful Cover Selection 100% of Total Contribution Beneficiaries Mandatorily 1 Beneficiary ONLY per plan Other Features Simple application process and quick policy issuance No medical examination; only simple health declaration for up to AED 1.55 million for regular savings Annual Takaful Solidarity Fund surplus distribution No case is declined BENEFITS Protection Approval Medical Examination Transparency Maturity Benefits Takaful Benefits [in case of death] Supplementary Takaful Benefits OPTIONS* Increase of Regular Contribution Decrease of Regular Contribution* Additional Bulk Contribution Partial Withdrawal Deferral of Contribution Change in Payment Frequency Surrender Paid-up Restart Continuing After Maturity Protects your family against mishaps with our Takaful cover Immediate approval & issuance of policy No medical required (this applies to 98% of our cases) Peace of mind in awareness of the Takaful Covers from contract start date DPP Customers: Payable in above given frequencies at the protected unit price or the market unit price, whichever is higher Cover selected or cash value, whichever is higher Payable upon death between time of contract activation and contract start date (payment of first contribution) Supplementary Takaful Benefits = Takaful Benefits payable upon death Min. monthly AED 300. No change in Takaful Benefits Min. monthly AED 1,000 and equivalent in other frequencies anytime after 1st contract anniversary changes in Takaful Benefits Minimum AED 3,000 No change of Takaful Benefits Possible at any time before maturity without penalties, provided that participant s share value doesn t fall below AED 10,000 After 18 months of regular payment For max. 12 months with Takaful Benefits On the anniversary only, after the recovery of fees At any time with no additional fees (Surrender Proceeds = cash value - any outstanding fees) Can be availed after 18 months, provided the cash value is above AED 10,000 You may restart your policy after Paid-up. Subject to underwriting process if after 6 months and above Continue the participation in investment strategies after maturity, no Takaful Benefit applicable * Terms and Conditions apply, please refer to the GTC & PINS.

6 10 Scenario 1: Mr. Ahmed has received 4 yearly installment payouts upon maturity of policy (rather than lump sum payout) Milestones Benefits Policy Term Payout can be used to cover college fees Child enrolls in an engineering course Final payout at maturity of policy (at age 20 of the child) Plan is purchased at age 1 of child LET S UNDERSTAND THE PLAN WITH AN EXAMPLE: Mr. Ahmed (30 years of age) is an architect with a real estate firm. His wife is a doctor and has her own clinic. Their son Mohammad is now 1 year old. Mr. Ahmed knows well that education costs are rising and that life is uncertain. He wants to ensure that Mohammad s education is financially secure, even if, one day, he is not around anymore. He has ongoing investments in equity and Shari ahcompliant mutual funds. However, he does not want to be entirely dependent on market returns for his son s future, and wants to ensure that it has the backing of Shari ah-compliant capital protected returns. He therefore opts for the Takaful Education Savings Plan. 1st payout installment in year 17 2nd payout installment 3rd payout installment Saving phase 25% year 1 year 16 25% year 17 year 18 25% year 19 25% year 20 11

7 12 Scenario 2: Mr. Ahmed has received 8 biannual installment payouts upon maturity of policy Milestones Benefits Policy Term Payout can be used to cover college fees Child enrolls in an engineering course Final biannual payouts at maturity of policy (at age 20 of the child) Plan is purchased at age 1 of child Saving phase First two biannual payout installments in year 17 Second two biannual payout installments Third two biannual payout installments Dynamic Protection Program 12.5% year 1 year % year % 12.5% year % 12.5% 12.5% 12.5% year 19 year 20 In light of their long-term increase in value, Shari ah-compliant funds have been very important investment instruments in the past. The developments in the stock market over recent years have, however, also shown the risks to which participants may be exposed in the event of a declining market and fluctuations in equity values due to volatility. At the same time, cash does not represent a real alternative for mid-term or long-term investments, while participants also tend to be afraid of missed chances. What s more, traditional risk balancing by adding bonds to the investment portfolio is not Shari ah-compliant either. 13

8 14 15 As such, and in partnership with an international bank (rated A+ by an international credit rating agency), the plan includes a Shari ah-compliant Dynamic Protection Program (DPP), which is aimed at providing breakthrough solutions to these issues. Frequently Asked Questions 1. What are education solutions? Education solutions ensure comprehensive financial planning for your child s education/ developmental needs. You pay contributions regularly, which then allows you to make partial withdrawals* of money during key educational milestones in your child s life. This offers you financial protection and safeguards your children s future in case of any unfortunate events. 2. Why do I need an education plan? Increasing costs of education: The cost of education is rising at a rapid pace across all levels. In order to ensure that you can pay for your children s education, it is necessary for you to start saving as early as possible. Multiple interests of children: In order to ensure that your child is an all-rounder, they should be trained and allowed to thrive in different activities, such as sports, arts, etc. All these extra-curricular pastimes can cost you a vast amount of money, and hence add to the overall cost of education. Protection: In case of an unfortunate event, Takaful benefits are payable to the beneficiary during the term of the Policy. 3. Why? As a parent, you certainly would not like to compromise the prospect of a bright career for your child, regardless of the rising cost of education. All you need is a saving plan that is designed to provide you with funds at key educational milestones and look after your loved ones future even if you are not able to. The benefit ensures that in case of an unfortunate event the child receives benefits at important stages of his/her academic life, and their education never suffers setbacks due to a lack of funds. Disclaimer: Any and all insurance Takaful policies provided in relation to this program are issued by the Dubai Islamic Insurance and Reinsurance Company (AMAN), a company incorporated under the laws of the United Arab Emirates, having its registered office at Dubai PO Box 157 and acting as the issuer and operator of the Takaful insurance in accordance with the terms and conditions of the relevant Takaful policy to which this program relates and the principles of the Islamic Shari ah approved by the Shari ah Board of AMAN. Accordingly, Al Hilal Bank P.J.S.C. shall in no way be bound to any matter or thing under these Takaful insurance polices. Al Hilal Bank P.J.S.C. is only a distributor of the plans. * Terms and Conditions apply, please refer to the GTC & PINS. 4. Can I surrender my policy? The policy can be surrendered at anytime before the Maturity Date without any surrender charges. The surrender proceeds are equal to the value of the participant s share, minus any outstanding part of the Acquisition Fee and the Entrance Fee. 5. How can I buy this plan? You can purchase the plan in accordance with your preferences and needs by choosing from one of the following: Meet an advisor at one of our Seghaar Centers Visit your nearest Al Hilal Bank branch Call us on * Please refer to the General Terms & Conditions (GTC) for details.