Professional Documents
Culture Documents
Takaful Islamic Insurance
Takaful Islamic Insurance
Presentation
Insurance
Takaful
Characteristics
Need
of Takaful
of Takaful
Difference between Takaful and Conventional Insurance
Products of Takaful
Models of Takaful
Role of Takaful in Islamic Economic System
Market Status
Issues & Challenges
Suggested Measures
Conclusion
INSURAN
CE
Islamic Insurance
Conventional
INSURANCE
A contract in which an individual receives
financial protection against losses from an
insurance company. The company pools clients'
risks to make payments more affordable for the
insured.
What is Takaful?
Takaful (Islamic insurance) is
a financial transaction of a
mutual co-operation
between two parties towards
providing a financial security
for one of them against an
unexpected material risk.
Thakaful is
Social scheme
Arabic word
Legally binding agreement
Common good
Contributions
Losses & liabilities
Uncertainty removes
Fair distribution of
surplus
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Practices of
the Holy
Prophet (SAW)
The relevant legislations
passed in the first
constitution of Medina
was in 622 B.C
Practices of the
Companions
Hazrat Umar (R.A) ordered to a group
of Mujaheedin in each district, to
contribute an equal amount of money
to help legal heirs of those victims, in
case if any person is killed by any other
person of the same district.
Characteristics of Takaful
surplus
Why Conventional
Insurance is
unacceptable in Islam???
Objections to Conventional
Insurance
Scholars view the insurance contract as
an exchange contract money is being
exchanged for money over time.
Insurance is a buy and sell agreement.
.
Elements of:
Uncertainty Gharrar
Gambling Maisir
Interest Riba
Profit distribution
Investment of funds
Nature of capital
GHARAR-Uncertanity
Gharar is forbidden in Islam because it is
not showing the full knowledge , disclosure
and transparency.
Gharar describe RISK..
Maiser-Gambling
Maisir resembled with Risk taking
whereby insured get a huge amount
without any equivalent input.
Insurance include Maisir where
insured makes a bet on the
happening of loss and insurer also do
it.
Riba-Interest:
Investment Of
Funds
Insurance companies invest in such type
of assets that are totally prohibited in
Islam such as alcohol, gambeling, bonds
etc. while the Takaful companies invest in
interest free funds that are halal-oharam.
Nature of Contract:
In Takaful every policyholder has the right to
know .???
How their money is used?
How the surrender value is calculated?
& the Takaful policyholders must be careful
that the funds are used for halal purposes.
Insurance contract based on interest.
Profit Distribution
In Takaful every policy holder has the
right to know about the distribution of
profit
among
partners
but
in
conventional insurance there is no hard
and fast rule about that, its totally
depend upon management of company
DIFRENCE
BETWEEN
TAKAFUL
AND
CONVENTIONAL
INSURANCE
Issue
Risk
Gharar
Maisir
Investment
Surplus
insurance
Tkaful
Risk transfer Risk sharing
Gharar exist Gharar
brought
down by
making
conditional
donations
Payment
Obviates the
depends
element of
upon chance maisir
Interest
Interest free
based
Surplus in
Distribution
hands of
according to
PRODUCTS OF
TAKAFUL
Products of
takaful
Genera
l
takaful
Family
takaful
Child
education
plan
Child
marriage
plan
Savings +
protection
plan
Retirement
plan
Marine
takaful
Property
takaful
Motor
takaful
General Takaful:
General takaful offer all kinds of non life risk coverage
It is normally divided into following classes
Property Takaful
Marine Takaful
Motor Takaful
Miscellanea Takaful
Family Takaful
Children Education
Plan:
Long term savings
Protection for child education
Education will continue when you are not
around
Children Marriage
Plan:
Loan Protection
Ease in coming financial
challenges
Plan will continue
Received good lump sum
amount
Financial protection +
Saings Plan:
"A companion of Prophet Muhammad
(s.a.w.w.) asked: 'O Prophet of Allah!
Should I tie my camel and then
entrust Allah or should I leave the
camel untied and then entrust Allah?'
The Prophet (s.a.w.w.) replied: 'Don't
leave your camel untied; instead first
tie the camel and then put your
Tawakkal on Allah.'"
TAKAFUL MODELS
There are three main different Takaful Models use
today.
Takaful
Models
Mudharabah
Wakalah
Wakala -waqf
model
WAKALA-WAQF
MODEL
Wakala model
with waqf fund
WAKALA
IN ARABIC
AGENCY
Waqf
fund
Participant
contribution /
Tabarru
Participants/p
olicyholder
contribution
Shareholde
rs
/ Waqf fund
Overall
takaful
contract as
wakeel
Administrated
by Opretor
Only
investment
portion as
mudarib
WAQF FUND
1
Saved for
payment of
wakalah fee
claims or
retakaful
expenses.
This portion is
invested, or
used for
making
investment.
Waqf fund
Profit on
investment
Profit sharing on MUDARBAHA basis
Profit for
participants
Minus
Administration
expenses like
employees
salary etc.
MINUS
Management
expenses of
company.
Waqf fund
Waqf fund
Mudarabah
model(partnership
of sharing profit
and loss)
Policy
holder
Provide capital
Takaful
operator
Rabb-ulmal
Mudarib
1.
2.
3.
4.
Issues
&
challenges
faced by
Takaful
1. Development Of
Human Resource
Takaful is obstacle by less human
resources.
Lack of talented, skilled and
experienced people.
It is good to teach people Takaful
concept.
2. Lack of
Awareness
Islamic financial institutions are not putting too much
3. Regulatory Framework
Often, scholars are not agree each
by specific region.
4. Cooperate Governance
Quite self interest between
investment vehicles,
especially with the long
term duration.
The limited range of
6. Distribution
channel
Micro insurance
Life
7. Lack of
standardization
Kind of model of Takaful
Every nation has its own model of Takaful.
Terms of standardization is mainly based on
different regions.
The lack of standardization will harm the
development of Takaful.
welfare
scheme
M Fo
um us r
m lim
ah
Products of
takaful
Genera
l
takaful
Family
takaful
Child
education
plan
Child
marriage
plan
Savings +
protection
plan
Retirement
plan
Marine
takaful
Property
takaful
Motor
takaful