Takaful Case Study

Abstract:

The word takaful is derived from Arabicver Kafala‟, which means to guarantee, looking after, to help and to take care of one’s needs. Takaful is a system of Islamic insurance based on the principles of „ta‟awun‟ (mutual assistance) and „tabarru‟‟ (voluntary contribution). The conventional insurance contract binds the insured to pay certain number of premiums otherwise the paid premiums are forfeited. The poor insured suffers double loss i.e. one due to the circumstances, which make him unable to pay further, and secondly, the insurer takes away his hard earned premiums which he has paid so far. Thus, the operating activities of Takaful operators are not straight forward and simple, compared to the conventional counterpart... Thus, the objectives of this case study are to highlight the current issues in Takaful industry and Life insurance to provide the recommendation for future. The contemporary issues in Takaful
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 it works more like a joint guarantee in which all participants contribute their own shares of premiums into a pool and mutually agree to compensate those participants who suffer from an insured peril. Muslim jurists generally agree that takaful insurance is accordant with the Sharia, as halal concepts of tabarru‟ (meaning donation or contribution) and takaful (meaning joint venture or shared responsibility) are deeply embedded in it (Syarikat Takaful Malaysia, 1999). Hence, both the Takaful operator and the participant are mutually helping each other for a financial protection. Such a mutual co-operation between both parties is certainly in line with the Qur‟anic doctrine of mutual co-operation as Allah (swt) commanded to the