INTRODUCTION

Takaful, Islamic alternative to insurance, is based on the concept of social

solidarity, cooperation and mutual indemnification of losses of members.
It is a pact among a group of members who agree to jointly indemnify the
loss or damage that may inflict upon any of them out of the funds they
donate collectively. As per practice of the Takaful companies, a part of
contributions (premiums) under Takaful system falls under the category of
donation in order to spread liability with the objective of common good.
The remaining part of the premium is given on the basis of Mudaraba.
Therefore, structure of Takaful that comprises the contracts of Mudarabah,
Tabarru (to donate for benefit of others) and mutual sharing of losses, is
made so as to eliminate the element of absolute uncertainty so far as
determination of contributions is concerned. There would be some
uncertainty in even Takaful system but that would be of commercial
nature pertaining to the result of the business conducted by the company.
As such there could be only Gharar-e-Yaseer - greatly minimized and,
therefore, acceptable from Shariah standard.
DEFINITION
Takaful (Arabic: )is an Islamic insurance concept which is grounded
in Islamic muamalat (Islamic banking), observing the rules and regulations
of Islamic law. This concept has been practised in various forms since 622.
Muslim jurists acknowledge that the basis of shared responsibility (in the
system of aquila as practised between Muslims of Mecca and Medina) laid
the foundation of mutual insurance.The term takafulis a masdar
(infination noun), which is derived from the root word kaf fa la. The word
Takaful whose chief characteristic is al- Musharakah, which means
sharing. Thus, the word Takaful means shared responding or shared
guarantee, responsibility, assurance or surety.
Technically, from the economic point of view Takaful means, mutual
guarantee provided by a group of people living in the same society
against a defination risk or catastrophe befalling ones life, property or
any form of valuable things. Hence, a takaful is better knows as cooperation insurance.In takaful usually four parties are involved namely the
participant, the operation, the insured, and the beneficiary. The nature of
takaful is that anybody in the society who has the legal capacity may
contribute a sum of money to a mutual co-operation fund, so as to ensure
material security for other against a defined risk encountered by anothers
life or property.
Thus, those who contribute to the mutual fund are known as
paticipant, while those who are among the participants that face the risk
and are assisted by the fund are known as the insured. Those who
actually benefit from are known as beneficiaries of the co-operation fund
monetary contribution made by participants to the fund is known as the
mutual contribution. The fund ia managed by a registered or licensed
body or cooperation known as Takaful aperator, who binds himself

unilaterlly to manage the fund according to Shariah principles, and also to

provide reasonable finanacial security to those who genuinely deserve it
for the loss or damage suffered by them from a defined risk.

The Mechnism of Takaful.

Policyholders co-operate among themselves for their common good.

Every policyholder pays his subscription to help those that need
assistance.
Losses are divided and liabilities spread according to the community
pooling system.
Uncertainty is eliminated in respect of subscription and
compensation.
It does not derive advantage at the cost of others.

Theoretically, Takaful is perceived as cooperative insurance, where

members contribute a certain amount of money to a common pool. The
purpose of this system is not profits but to uphold the principle of bear
ye one anothers burden. Commercial insurance is strictly not allowed
for Muslim as agreed upon by most contemporary scholars because it
contains the elements of riba, gharar and maysir.
Takaful Operation in Malaysia.
Participants contribute a sum of money into a common fund, which will
be used to mutually assist the members against a defined loss or
damage. A Takaful operator is entrusted to manage the fund, which
runs the operation commercially as a business venture for profit.
Sources of income for the operator are from :

Profit from the investment of its shareholders fund

Agency / Wakalah fee
Share of investment profit of Takaful funds
Surplus of the Takaful fund

Takaful Products in Malaysia.

Family Takaful Product.
Takaful Myimpian.
Takaful Myimpian is a plan that provides an avenue to save towards
our goal. It protects against any possible consequence of any
mishaps in the future. The riders attachable to this Takaful are

Takaful hospital income, Takaful level term and Takaful critical

illness.
Investment Link.
Takaful Myinvest.
Takaful Myinvest offers the participant with the Takaful plan plus
investment scheme. Takaful Myinvest help the participant to invest
and be financially protected. The benefit of Takaful Myinvest is in the
event of death and Total and Permanent Disability (TPD). The age
that is eligible is between 18-65 years old.

Community.
Waqf Takaful Plan.
This plan is designed for any individual to save regularly as a
donation under the waqf system. Participant would have a
considerable sum of money through accumulation of the Takaful
instalment. This plan is eligible for any Muslims aged between 18-70
years old.