Iwm 7

• Wealth Protection


  The process of preserving wealth in order to ensure the wealth owner does not suffer a total loss in the event of a risk or disaster
• Protecting wealth is demanded in Islam – in line with the Maqasid Shariah
• Risk management


  The act to avoid, control, reduce or finance risk
• Risk


  An uncertainty regarding loss, Uncertainty concerning the occurrence of a loss, Unpredictability
• Risk


  • The risk of being killed in a plane crash
  • The risk of lung cancer for smokers
  • The risk of a factory destroyed in a fire
• Risk may occur to one's life, property or business
• Risks will affect the lives of individuals & it will be devastating & shattering and leave the unfortunate people helpless and vulnerable
• It is the duty and responsibility of every Muslim to find ways & means to strive hard to avoid disaster whenever possible or to lighten his/her family's burden in the event of such ill luck occurring
• Conventional insurance


  The present approach to risk mitigation is to buy an insurance policy whereby the insured transfers the risk to the insurance company which, in exchange for a premium, accepts the responsibility of indemnifying the insured in case the risk insured for materializes
• Conventional insurance is based on sale contract
• Riba

  The amount of money received by the insured is mostly in excess of total premiums he has actually paid
• Gharar


  The subject matter of the contract or ma'qud 'alayh is not certain until the insured event has taken place
• Maysir


  Policyholders are held to be betting premiums on the condition that the insurer will make payment (indemnity) contingent upon the circumstance of a specified event
• Takaful


  A system whereby participants contribute regularly to a common fund and intend to jointly guarantee each other, that is, to compensate any of the participants who are inflicted with a specific risk
• Tabarru'

  The contribution paid by the participants which is considered a donation to the members in the group
• Contract between participants & takaful operator

  1. Participants donate to takaful fund

  2. Takaful operator manages investment, takaful activities, mudarabah, wakalah, ju'alah, waqf
• Application of takaful

  • Participants cooperate among themselves for their common good
  • Every participant will pay contribution to assist fellow members
  • Contribution is considered a donation (tabarru') to the group
  • Contribution and compensation terms are made clear to eliminate uncertainty (gharar)
  • Does not aim at deriving advantage at the cost of other individuals
• Classification of takaful operations

  • General takaful (short-term policy)
  • Family takaful (long-term policy)
• Takaful stakeholders


  • Takaful operator
  • Participant
  • Beneficiary
  • Nominee
• Differences between takaful & insurance

  • Contract type
  • Obligation of the participants/policyholders
  • Obligation of the operator/insurer
  • Return of the operator/insurer
  • Countervalue
  • Indemnification component
  • Insurer-insured relationship
  • Investment fund