Takaful insurance has been popular in the insurance industry as it is related to Islamic financial. In this entry, I’ll share about takaful :-
What is Takaful insurance
Takaful is insurance protection based on Shariah principles. We contribute a sum of money to a common takaful fund in the form of participative contribution. There’s a contract(aqad) to become one of the participant by agreeing to mutually help each other, should any of the participant suffer a specified loss.
Both insurance and takaful have similar basic principles. While takaful offers products similar to conventional insurance, it has unique features :
– The surplus of the fund is shared between you and the takaful company based on a pre-agreed ratio. The amount in the surplus fund is calculated after deducting expenses such as claims, technical reserves, management expenses and re-takaful.
– You are entitled to this surplus if you had not made a claim during the period of the takaful.
There’s 2 type of takaful :-
Family takaful is a combination of protection and long-term savings and usually covers a period of more than a year. It provides financial benefits if you suffer tragedy a well as gives you investment profits. Contribution payment can be paid monthly, quarterly, semi-annually or annually. The basic types of family takaful include :-
1. Individual family – With plans that include education, mortgage and health, you and your beneficiary will receive financial benefits arising from death or permanent disability. There are also long-term savings and investment profits are distributed upon claim, maturity or early surrender.
2. Retirement annuity – Plan that procides you with a regular income upon retirement.
3. Investment linked – Combining investment and protection, part of contribution is used to buy investment unis while the balance goes towards providing coverage in the event of death or permanent disability.
4. Medical and health – This covers the costs of medical treatment including hospitalisation and surgery.
The general takaful insurance protects on a short term basic usually for a one year period for any loss or damage to our property or personal belongings. We pay a one time contribution on an annual basis.
There’s 3 main type of general takaful such as :-
1. Home Takaful – A house owner takaful covers your home against loss or damage caused by flood, fire and other similar perils while a house holder takaful covers loss or damage to the content of your house.
2. Motor Takaful – This takaful covered against loss or damage to your vehicle due to fire, theft or an accident as well as bodily injury or death of a third party and loss or damage of a third party’s property.
3. Personal Accident – This gives you or your beneficiaries with compensation in the event of death, disablement or injuries arising from an accident.
Reference : Money Sense book from AKPK
For more info about takaful, get the book below