*Takaful is a protection scheme based on mutual assistance. Takaful contributions are divided into two, one for Investment and the other for Tabarru’.
Tabarru’ is a donation to help participants who fulfil the required conditions to receive assistance.
'… Help You one another in Al-Birr and At-Taqwa (virtue, righteousness and piety); but do not help one another in sin and transgression…' (Al-Maidah : 2)
| SUBJECT |
TAKAFUL |
INSURANCE |
| Investment |
Halal investment |
Involving prohibited element |
| Profit |
Profits sharing on investment income and surplus |
Profits belong entirely to the insurance company |
| Acceptance of risk |
Based on Shariah risk parameter |
There is no Shariah parameter involved |
| Legitimacy of fund |
Funds belong to the participants and managed by the operator for a legitimate consideration for the services rendered |
Funds belong to the company, though separation of assets is maintained between the shareholder and the policyholder |
| Sources of Regulatory Framework |
Divine justified principles:
- Primary sources
- Secondary sources
- Specific sources
- Shariah specific sources
- Shariah based precedents
- Juristic opinion (fatwa)
- Decisions of the Committee
|
Man – made Law:
- Statutes
- Case laws
- Miscellaneous
- Specific sources
|
| Regulatory Authorities |
- IFSA
- MOF
- Central Bank and subject to the Shariah Principles
|
- FSA
- MOF
- Central Bank; subject to the Common law
|
Risk is defined as the probability or possibility of lost and hazard that could happen. Risk has captured attention in Islam as reflected in the al-Quran and Hadith of the Prophet:
‘...Verily If you leave your beneficiary in rich is better from your leave them in poor and cadge from other people...’ (Bukhari and Muslim)
Contract in Shariah include both bilateral and unilateral
A contract is also known as ‘aqad’ (arabic term) is defined as the interrelation of offer and acceptance on the subject matter (ma’aqud ‘alaih)
Any contract dealing with transfer of property will need additional underlying contract that meet the purpose of the contract