Insurance

Takaful - Islamic Insurance Product

Takaful (Ja^l) is an Islamic insurance concept which is grounded in Islamic muamalat (banking transactions), observing the rules and regulations of Islamic law. Takaful is basically a system of Islamic insurance based on the principle of Ta'awun (mutual assistance) and Tabarru (voluntary contribution), where the risk is shared collectively by the group. It is operated on the basis of shared responsibility, brotherhood, solidarity and mutual cooperation or assistance, which provides for mutual financial security and assistance to safeguard participants against a defined contingencies or risk.

The word Takaful is derived from the Arabic verb Kafala, which means to guarantee; to help; to take care of one's needs. This concept has been practised in various forms for over 1400 years. Muslim jurists acknowledge that the basis of shared responsibility in the system of aquila as practiced between Muslims of Mecca and Medina laid the foundation of mutual insurance. It is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members. It is a pact among a group of persons who agree to jointly indemnify the loss or damage that may inflict upon any of them, out of the fund they donate collectively.

The Takaful contract so agreed usually involves the concepts of Mudarabah, Tabarru' (to donate for benefit of others) and mutual sharing of losses with the overall objective of eliminating the element of uncertainty.

Family Takaful (Life Insurance)

It is the alternative to life insurance and covers risks associated with life while complying with the shariah principles in respect of financial transactions.

General Takaful (Non-life Insurance)

General or non-life takaful covers the risk of loss to assets and property and is an alternative to non-life insurance.