Takaful

Takaful Muhammad Hasan

• Takaful Definition• Takaful Features• Importance of Takaful• Islamic Scholars• Wakla-waqf model• Takaful process• Takaful challenges• Solutions• Conclusion

Contents

• Takaful is an arabic word and this word means Guarantee against a loss or an uncertain event

• In a takaful model a mutual fund is created in which participants contribute as per agreed ratio to compensate contributors in case of an uncertainty.

Takaful

• Islamic profit sharing models Mudarba,Wakla and wakala-waqf models are used

• Those operations are used which are permitted by shariah.

• Takaful is free from excessive gharar• Company(insurer) is Known as operator

• Policy holder(insured) is Known as participant

• Insurance agent is known as wakeel• Contribution of participant is known as

Tabarru

Features of Takaful

• Islam teaches us to think about the future and to help others in the hour of need, ALLAH(swt) says in holy Quran ;

`` Surely we will test you with something of fear, hunger and a loss of wealth and lives and fruits , but give good tidings to the patient`` (Albaqarah 2:155)

Importance

• Allah (swt) will test us surely so we should do something to become successful in that exam,

creating a takaful fund with mutual consent would be very helpful in this regard, because of takaful plan you can have compensation against a loss.• This is our Islamic and moral duty to

help others

Importance

• To orphans restore their property (When they reach their age), nor substitute (your) worthless things for (their) good ones; and devour not their substance (by mixing it up) with your own . For this is indeed a great sin.(Surah An-Nisa, 2� )

• In this ayat ALLAH (swt) orders muslims to help the orphans, this ayat also gives an indications that elders must save something for the better future of their children, we don't know what is going to happen the very next moment because bad time don't knock at the door.

Importance

• No one knows when he will die , So we should save some thing for bad times and not leave our dependents bare handed.

• Jubilee Takaful plans provide financial security in tough times , we don't give money in the hand of minor Childs, for a minor child our rule is that there must be a guardian, following Islamic rules we don't mix good with bad and we provide the exact amount of policy , which would be very beneficial in fulfilling their financial needs.

Importance

• The takaful contract is permissible because of

following conditions : (a) It contains no riba clause (b) Its subject is legitimate(Islamic) (c) Takaful is free from elements of excessive gharar(covers inflation) and maysir

Islamic scholars on Takaful

• In wakala waqf model two type of funds are created Participant investment account (pia) &

Participant Takaful Fund (ptf).• Participant Takaful fund is also known

as Waqf fund.• A waqaf fund is created by share

holders of takaful by contributing amount as per the agreed ratio to compensate participants on maturity

or happening of a certain event.

Wakala-Waqf Model

• Takaful operator plays two roles at same time

they work as an operator and as a mudarib.• After deduction of the operations &

Services fee all the amount of (PIA) fund is tranfererd to waqf fund(PTF) account and then operator plays its role as mudarib and invest the fund in those organization which are working on Islamic principles

Takaful Process

Takaful operations are facing various challenges some of them are mentioned below ;• Investment restrictions (only specific

companies)• Retakaful (reinsurer hasn't adopted takaful principle)

• Distribution channel(specific channel)• Islamic qualified staff (conventional studies

approach)• Accounting standards (interest based)• Risk Rating ( conventional rating

would differ)• Shariah decision (different sections-different

approach)

Takaful Challenges

• Risk Rating standards differ because of Islamic mode of financing so a properly qualified staff is required for takaful operations.

• Fatwa on takaful by the most trust worthy and well reputed Alam-e-din.

• Different department for takaful operations

• Takaful business must be retakaful(reinsured) by an organization which is following takaful operations strategy , because Islamic mode of financing differs from conventional.

Solutions

• Takaful addition in our product line would be very helpful for the company to achieve its targets because a number people were not insured because they thought conventional insurance has contradiction with islamic laws, Now by the addition of takaful their perception would be changed.

• At present we are new in takaful operations & we are at learning stage, by the passage of time as we will gain experience things would become streamline, we will enjoy working in takaful operations in the same as we are working in conventional.(inshallah)

Conclusion

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