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Takaful is an Islamic insurance concept which is grounded in Islamic muamalat (banking transactions), observing the rules and regulations of Islamic law. Fiqh ( Arabic: فقه, fɪqəh is Islamic Jurisprudence. Fiqh is an expansion of the Sharia Islamic law—based directly on the An academic discipline or field of study is a branch of Knowledge which is taught or Researched at the college or university level This is a sub-article to Religious education, Academic discipline, and Islam. This is a sub-article of Fiqh and Law and economics. Islamic economics is Economics in accordance with Islamic law This is a sub-article of Islamic economical jurisprudence. Zakaat ( زكاة zækæːh zakaat or zakāh, has the implied Under Islamic law, jizya or jizyah (جزْية ʤɪzjæh Ottoman Turkish: cizye both derived from Pahlavi and ultimately from Aramaic In Sharia (Islamic Jurisprudence) nisab (نصاب is the amount which savings or capital or product must exceed in order for the Muslim owner to be obliged Khums ( خمس xʊms is the Arabic word for One Fifth (1/5 According to Shia Islamic legal terminology it means "one-fifth of certain items which a person This is a sub-article of Zakat, Infaq and Mustahabb. Sadaqah (plural sadaqat) ( صدقة, sˤɒdæqɒh is an A waqf ( plural, awqāf; vakıf wæqəf is an inalienable religious endowment in Islam, typically devoting a building or plot of land for Muslim Bayt al-Mal, AKA Bayt al-Mal Lil Muslimeen is a Hezbollah -controlled organization that performs financial services for the organization Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law ( Sharia) principles and guided by Islamic economics Riba ( Arabic: ربا rɪbæː means Usury and is forbidden in Islamic economic jurisprudence. Murabaha (accurate transliteration murābaḥa, Arabic مرابحه is defined as a particular kind of sale compliant with Shariah, where the seller expressly mentions Sukuk ( Arabic: صكوك plural of صك Sakk "legal instrument deed check" is the Arabic name for a financial Certificate but can be seen This is a sub-article to Islamic economical jurisprudence and Inheritance. This is a sub-article of Islamic economic jurisprudence and Muslim world. See also Modern Islamic philosophy, Islamism, Islamic terrorism Political aspects of Islam are derived from the Quran, the Sunna In Islamic law Marriage ("ʿurs" عرس is a legal bond and Social contract between a man and a woman as prompted by the Shari'a. This is a sub-article of Fiqh and Criminal law. Islamic criminal law (فقه العقوبات is Criminal law in accordance This is a sub-article of Islamic jurisprudence and Etiquette. This is a sub-article to Islamic jurisprudence and Islamic theology. This is a sub-article to Fiqh and Hygiene Hygiene is a prominent topic in Islam. Islamic military jurisprudence consists of the basic laws governing the conduct of the military aspects of Jihad (also known as "lesser Jihad " For other meanings including people named 'Islam' see Islam (disambiguation. Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss Sharia ( Arabic: ar شريعة) is the body of Islamic Religious law. This concept has been practised in various forms for over 1400 years. It originates from Arabic word Kafalah, which means "guaranteeing each other" or "joint guarantee". Arabic (ar الْعَرَبيّة (informally ar عَرَبيْ) in terms of the number of speakers is the largest living member of the Semitic language In principle, the Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants. It is a form of mutual insurance. Mutual insurance is a type of Insurance where those protected by the insurance (policyholders also have certain "ownership" rights in the organization.

Islamic References to Takaful

These fundamentals are based on the sayings of Prophet Mohammed (S. In Religion, a prophet (or prophetess) is a person who has encountered the Supernatural or the divine and serves as an intermediary IMPORTANT PLEASE READ ##### For all questions relating to the addition of (pbuh peace be upon him or other honorifics A. W. ). Based on the hadith and Quranic verses mentioned below, Islamic scholars had decided that there should be a concerted effort to implement the Takaful concept as the best way to resolve these needs. Some of the examples are:

“The basic fundamentals underlying the Takaful concept are very similar to co-operative and mutual principles, to the extent that the co-operative and mutual model is one that is accepted under Islamic Law. "

Principles of Takaful

The principles of Takaful are as follows:

Theoretically, Takaful is perceived as cooperative insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits but to uphold the principle of "bear ye one another's burden. " Commercial insurance is strictly not allowed for Muslim as agreed upon by most contemporary scholars because it contains the following elements: i) Al-Gharar (Uncertainty) ii) Al-Maisir (Gambling) iii) Riba (Interest)

There are three (3) models and several variations on how takaful can be implemented. Riba ( Arabic: ربا rɪbæː means Usury and is forbidden in Islamic economic jurisprudence. Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets

  1. Mudharabah Model
  2. Wakalah Model
  3. Combination of both

The Mudharabah Model (Profit Sharing)

By this principle, the entrepreneur or al-Mudharib (takaful operator) will accept payment of the takaful installments or takaful contributions (premium) termed as Ra's-ul-Mal from investors or providers of capital or fund (takaful participants) acting as Sahib-ul-Mal. The contract specifies how the profit (surplus) from the operations of takaful managed by the takaful operator is to be shared, in accordance with the principle of al-Mudharabah, between the participants as the providers of capital and the takaful operator as the entrepreneur. An entrepreneur is a person who has possession over a company enterprise, or Venture, and assumes significant accountability for the inherent risks and the outcome The sharing of such profit may be in a ratio 50:50, 60:40, 70:30, etc. as mutually agreed between the contracting parties.

In order to eliminate the element of uncertainty in the takaful contract, the concept of tabarru (to donate, to contribute, to give away) is incorporated. In relation to this a participant shall agree to relinquish as tabarru, certain proportion of his takaful installments or takaful contributions that he agrees or undertakes to pay thus enabling him to fulfill his obligation of mutual help and joint guarantee should any of his fellow participants suffer a defined loss.

In essence, tabarru would enable the participants to perform their deeds in sincerely assisting fellow participants who might suffer a loss or damage due to a catastrophe or disaster. The sharing of profit or surplus that may emerge from the operations of takaful, is made only after the obligation of assisting the fellow participants has been fulfilled. It is imperative, therefore, for a takaful operator to maintain adequate assets of the defined funds under its care whilst simultaneously striving prudently to ensure the funds are sufficiently protected against undue over-exposure. Therefore the provision of insurance cover as a form of business in conformity with Shariah is based on the Islamic principles of al-Takaful and al-Mudharabah.

Al-Takaful is the pact among a group of people, called participants, reciprocally guaranteeing each other; while Al-Mudharabah is the commercial profit-sharing contract between the provider or providers of funds for a business venture and the entrepreneur who actually conducts the business. Profit sharing, when used as a special term refers to various Incentive plans introduced by Businesses that provide direct or indirect payments to Employees The operation of takaful may thus be envisaged as the profit-sharing business venture between the takaful operator and the individual members of a group of participants who desire to reciprocally guarantee each other against a certain loss or damage that may be inflicted upon any one of them.

Notes

  1. ^ Quran: Surah al-Maidah, Verse 2

External links

Takaful Calculator :

Takaful Resources:

Fatwa:

Other:

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