Takaful is the Islamic equivalent of insurance. The system based on mutual assistance and voluntary contribution. The risk between them is shared collective based on responsibility, solidarity, mutual cooperation and brotherhood. The concept is using Islamic rules and regulations.
This insurance not just for Muslim, non-Muslim also can join it. Muslim have the added comfort knowing that insurance is operated under Islamic law and supervised by Islamic scholar. Takaful companies are transparent to customers and they have to meet regulator and syariah standards which required them to treated customer equitably. In the contracts state customers profits will be split. Most of takaful operators sell policies life and general coverage.
| WHAT IS TAKAFUL INSURANCE |
Understanding Takaful Contract
As I’ve mention above, insurance is based on Shariah law. Most of current Takaful Practise use two main Aqad (contracts). The contract of Tabarru’ (Donation) and Wakalah (agency) are free from usury (Riba), wager or Maisir (gambling) and Gharar (uncertainty).
Under takaful people and companies concerned about hazards make regular contributions (“donations”) to be reimbursed or repaid to members in the event of loss, and managed on their behalf by a takaful operator.Takaful is grounded in Islamic muamalat (Islamic banking), observing the rules and regulations of Islamic law.
Takaful vs Conventional Insurance
1. Takaful is based on mutual cooperation while conventional is on commercial factors.
2. Takaful companies have re-insurance with Re-Takaful companies or with conventional re-insurance companies that adhere to certain conditions of Shari’a while insurance companies do not necessarily have re-insurance with re-insurance companies that abide by Shari’a principle
3. Takaful insurance companies don’t invest in unethical and immoral business while conventional insurance only care about profit.