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Takaful Insurance by SAMeera

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S@M! FARS

on 4 January 2014

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Transcript of Takaful Insurance by SAMeera

What is Takaful?
Meaning of Takaful
Takaful VS Conventional Insurance
How Takaful Works?

You undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer any form of misfortune, either arising from death, permanent disability, loss, damage or any other such misfortunes as covered under the Takaful you personally undertake.

The Contributions collected from the policyholders are considered as donations and they constitute the Takaful fund from which all claims are reimbursed.

At the end of each financial year, after deduction of expenses, any remaining cash surplus will not be retained by the company or its shareholders, but returned to the policyholders in the form of cash dividends or distributions.

In this respect, Takaful business is different from the conventional insurance in which the policyholders, rather than the shareholders, solely benefit from the profits generated from the Takaful and Investment assets



TAKAFUL Applies In Both Sectors
Public Sector And Private Sector
Why No to Conventional Insurance?
As agreed upon by most contemporary Muslim scholars, conventional insurance is strictly forbidden in Islam because it contains elements of:
Al-Gharar (Uncertainty)
Al-Maisir (Gambling)
Riba (Interest)

TAKAFUL FUND
Models Of Takaful
A Wakil (agent) is appointed

The wakil charges a fee for his services

The wakil invests and generates revenues

A takaful fund is basically a pool of money that participants create to help each other.
T A K A F U L
I N S U R A N CE
Presented By: Sameera Rafiq
Arabic root-word ‘kafala’ — guarantee.
Mutual Protection
Joint Guarantee.
A type of Islamic insurance, where members contribute money into a pooling system in order to guarantee each other against loss or damage.
TAKAFUL INSURANCE
It is a system of Islamic insurance based on the principle of TA-AWUN (mutual assistance) and Tabarru (Contribution) where the risk is shared collectively by the group members.

Reference — Al Quran:
“Help (ta’awan) one another in furthering virtue (bir) and Allah consciousness (taqwa) and do not help one another in furthering evil and enmity”. Al Maidah: verse 2 (5:2).

The purpose of this system is not profits but to uphold the principle of "bear ye one another's burden."
A form of mutual insurance that strictly observes the rules and regulations of Shari’a (Islamic law).
Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants

OR
The key difference between Takaful and conventional insurance rests in the way the risk is assessed and handled, as well as how the Takaful fund is managed.
Distribution
Investement
Polcyholders
Shareholders
Donation
THey can re-invest
or pay divdends
Wakala Model
Mudaraba Model
Partnership

Profit and loss sharing principal.

Contract for profit distribution is established.

Combination of wakala and Mudarabah.

relationship between the operator and Agent

The wakil can also be sahib ul maal.


Hybrid Model
The concept can be used to develop and implement the social security scheme for the public, commonly known as "takaful al-ijtimai."
Under the tijari sector the public as consumers will have the right to choose the types of product and service suitable to their taste and need.
Takaful al-Ijtimai
Tijari


Takaful is primarily based on co-operation and helping others against a defined risk. A Takaful policy is meant to protect the participants financially, via the premium paid by them and through the policies provided, based on the Islamic principles of Mudarabah and tabarru’.

The development of Takaful as an alternative to conventional insurance should be upheld in order to avoid the forbidden elements of maisir, gharar and gambling.

CONCLUSION
REFERENCES
http://www.islamicbanker.com/education/takaful-insurance-explained
http://www.investopedia.com/terms/t/takaful.asp
http://www.takaful.ae/english/about/whatistakaful.aspx
http://www.eurekahedge.com/news/07_feb_IFN_TakafulFunds.asp
Full transcript