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Transcript

GOAL!

Conclusion

  • Takaful has already contributed a lot to the global insurance industry by demonstrating that it can boldly go places and succeed, especially in life insurance.
  • Takaful is still a small industry but has all the potential to increase the size of the global insurance business.
  • Takaful however is not properly understood and there is still a great deal of work needed to increase its awareness.
  • Takaful is for all, irrespective of faith like conventional insurance but takaful has its own unique proposition that must be preserved and strictly adhered to through compliance with Shariah rules and principles.

Similarities between Takaful & Conventional Takaful

  • Compensates financially for protection against unforeseen risk
  • Same scientific rules and actuarial approaches to mortality rates, morbidity rates, loss ratios, claim experience and discounted cash flows for calculating price of risk and evaluation of liabilities

Takaful

Conventional Insurance

COMPARISONS BETWEEN TAKAFUL AND CONVENTIONAL INSURANCE

Takaful

Conventional Insurance

Differences between Takaful and Conventional Insurance

Takaful

Conventional Insurance

Conventional Insurance Overview

Siti Nabilah Sarpin

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Insurance provides the means for people to transfer the burden of uncertainty to the insurer, for an agreed financial consideration called the “premium”. In exchange, the insurer promises to provide financial compensation to the insured should a specified loss occur. It is an effective risk transfer mechanism by which individuals or organizations can exchange their uncertainty of financial loss (or risk) for the certainty of the premium. With a fixed premium, the insured is certain that he will not have to pay more for that year. This service of providing certainty of cost (fixed premium) is of immense value especially to organizations, as it would help them budget their expenditure confidently. This is the financial security provided by modern insurance.

The Concept of Takaful

In the Arabic context, the term “Takaful” is derived from the word “Kafala” which means to guarantee, guard and protect. Takaful means “guaranteeing each other”. In the Islamic interpretation, takaful is a pact among a group of members or participants that agree to always give mutual assistance to one another.

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