Need Assistance? Contact Hong Leong Call Center +603-76268899
Shariah Unit
Shariah Advisory Committees' Profile
Articles
Legal & Shariah Secretariat > Articles
Personal
 
Business
 

Articles

Unknown Benefits Of Takaful Coverage For Business And Personal Needs Of You And Your Family

Islam does not object to insurance per se but regards the conventional insurance scheme as not Shariah-compliant since it involves the elements of Gharar (uncertainty), Maisir (gambling) and Riba (interest) in the insurance contract. The establishment of Takaful entities are intended to bridge the gap deemed objectionable by the Shariah for the benefit of society by offering Shariah-based or better known as Takaful covers. The Takaful concept that is grounded in Islamic Muamalat is not something new but has been practiced for over 1,400 years. The word ‘Takaful’, which is Arabic, simply means taking care of one another. In principle, the Takaful system is based on mutual cooperation, responsibility, assurance, protection and assistance between groups of participants.
 
Generally, this concept offers an insurance plan which is based on two aqads (contracts), namely, the Tabarru’ (donation) and Mudharabah (investment) that is sincere (Ikhlas) and is managed professionally by Takaful organizations. The Takaful cover that is based on the Tabarru’ aqad (agreement) covers the following elements:

1. Responsible to one another
2. Cooperation and helping one another
3. Protecting one another from any difficulties and disasters

Thus, Tabarru’ can be defined as a form of sincere donation that is given by one party with the intention of helping others to bear monetary losses and misfortunes that may befall. One does not expect any exchanges or rewards from other parties. It is considered as a noble practice in Islam since there are so many benefits that can be derived as long as it is with an ‘Ikhlas’ intention.
 
A wide range of product offerings are available under takaful coverage suitable for both personal and business needs. Amongst the most popular are motor, MRTT (Mortgage Reducing Term Takaful) or Takaful MRTA, fire (for both buildings and stock in trade), PA (Personal Accident), Bancatakaful (covering education, hospitalization, etc.).

Major benefits of Takaful products that are not applicable under conventional insurance are summarized hereunder:

 The contributions made by Takaful policyholders are deposited into one Special Fund. The function of the fund is to provide financial assistance to policyholders who are in dire financial need due to losses or misfortunes.
If there are no claims made during the cover period, policyholders will be rewarded with ‘hibah’ i.e. a cash reward, which may be withdrawn in cash or used to off set the premium for the next cover period.
For Takaful MRTA, a portion of the premium paid is invested and the earnings from the investment are given back to the policyholder upon maturity subject to no claims being made during the cover period. Financing of Takaful MRTA contribution (premium) could also be arranged with some financial institutions.
Some Takaful operators offer a discount on the premium for certain products to participants who are in their twenties.

Takaful covers are available for all irrespective of race or religious beliefs. For Muslims, it “profits” them in the spiritual sense by helping them fulfill their religious obligations and social responsibilities while for non-Muslims, this is a viable alternative to their insurance needs

 

Copyright © Hong Leong Islamic Bank reserved. Use of the information on this page is intended for Malaysian citizens and Malaysian residents only and all contents on this website are governed by Malaysian law and are subject to the disclaimer which can be read on the disclaimer page. Optimized for Internet Explorer 6.