Takaful
Philosophy of Takaful
The philosophy of takaful is based on the spirit
of mutual responsibility, co-operation and cover in
social activities for the well-being of the people
and solidarity of the society.
The spirit of sharing coupled with a
sincere intention is strongly recommended in
Islam based on the following hadiths:“ The attitude of the believer and feeling of
brotherhood to one another is like that of a single
body. When one member of the body is hurt, it
will have an effect to the whole body”
“ Each one of you has a responsibility and each one
of you is responsible towards those under your
responsibility.”
(Reported by Bukhari and Muslim)
Differences Between Conventional insurance and
Takaful
First, insurance is a transfer technique whereby the insured
(customer) transfers the risk of financial loss to another
party which is the insurance company.
Second, it is a contract between the policyholder
and the insurer that states what the consequences of loss are
transferred and expresses the insurer’s promise to pay for those
consequences.
Differences Between Takaful & Conventional
insurance
Third, the contract of insurance involve uncertainty (gharar) as the
policy holder is paying premium for an event which is
unknown such as accident and death. These
events are also speculative (maisir)
Fourth, there is an element of usury (riba) in insurance as
money is being exchanged with money in a buying and selling contract.
Policy holder/beneficiary will obtained the
promised return (cash value) and the accumulated interest.
Premium collected is invested in riba based
transactions.
Tabarru’ differentiates takaful from insurance
Tabarru’ is an Arabic noun that means “ donation; gift; contribution”. Under
takaful, part of the contributions from every participants must be with
made with the intention of tabarru’ and not for
buying/selling. The existence of tabarru’ makes the
transaction permissible and valid according to the Shariah.
Mudharabah replaces interest
The contract of takaful uses Mudharabah (profit sharing) as its operating
principle and does not predetermined interest to be paid to the
policy holder/interest up front.
The takaful company acts as
mudharib and accepts the contributions from the participants. As the
entrepreneur, the takaful company will manage various takaful funds and
investment activities. The profit sharing ratio can be in any proportion (eg.
70:30 or 60:40) but must be agreed upon between the customer and takaful
company.
Islamic Investment Plan

Family Takaful Plan for Education
 Takaful Graduate Plan
Family Takaful Plan for Education

Basic Features
– It is regular and easy savings scheme which can be used as old-
–
–
–
–
–
–
age benefit or your child's scholarship fund in case of your
untimely death.
Customer will enjoy income tax relief on the payment of takaful
contribution.
Attractive returns, based on the profit-sharing of Mudharabah.
Flexible maturity period (10 to 40 years)
Supplementary cover for hospitalization benefits, personal
accident, permanent disability or family rider.
Low contribution i.e. RM15.00 per month.
Part-withdrawal facility of up to 70% of the balance of savings.
Family Takaful Plan for Education

Objectives
–
To save regularly towards accumulating customer own
scholarship fund which would finance their children's’
future education.
–
As a savings programme to benefit the child in case of
untimely death before the maturity period.
–
An assurance to help customer through with any
financial tide in case of mishap such as accident,
permanent disability or to finance hospitalization bills.
Takaful Graduate Plan

Basic Features
– A simple and regular savings plan to benefit child's education
upon entry into institute of higher education.
– Parent act as the trustee to guarantee the regular payment of the
takaful installment during the period of participation.
– The contribution
that he/ she pays regularly together with
returns on the investment will accumulate into family
scholarship fund. Proceeds from the fund can later be spent
towards the cost of child's future tertiary education.
– Contribution need only be paid up to age of 18 years.
Takaful Graduate Plan

Basic Features

– Maturity period when participant reaches 22 years old.
– Scholarship or Funding of Education upon entry at 20% a year.
– Open to children up to 18 years.
– Contribution is from RM10 to RM300 per month.
– Attractive returns, based on the profit sharing principles of
Mudharabah.
Takaful Graduate Plan
Scopes of Cover
- Covering cost of education at tertiary level
– Death
– Permanent and Total Disablement
– Personal Accident
As trustee:
– Death
– Permanent and Total Disablement.
Supplementary Cover
– Personal Accident
– Medical or Hospitalization Benefit
– Family Rider
How is profit realized ?
Each takaful contribution will be credited in the Family Takaful
Fund which is divided into:(i) Participant's Account (PA) and
(ii) Participants' Special Account ( PSA).
A substantial proportion of the installment shall be credited into the
PA solely for the purpose of savings and investment.
The balance of installments is credited into the PSA as tabarru’
(donation) for the takaful company to pay the benefits to their
heir(s) or beneficiary.
How is profit realized ?
- Both the PA and PSA shall be invested by the Company and returns
on the investment (if any) shall be shared according to the
Mudharabah principle (70% participant/ 30% Company).
- The participant's share of profit (70%) shall be credited into his
PA and PSA accordingly.
Example :Distribution of Contribution



Assuming the profit rate is 6% per annum and based on monthly
installment of RM100 from the 1st. year of customer’s child age.
Assuming he/she is 30 years old upon participation in this plan.
Tabarru' rates for the Participants' Special Accounts (PSA):
The tabarru' rates which is credited into the PSA is for Death &
Permanent Total Disability (TPD)
Age
Maturity Period
10
15
20
25
30
35
40
18-25
2.2%
3.9%
5.5%
6.1%
8.3%
10.5%
13.8%
26-30
2.2%
3.9%
5.5%
6.1%
9.9%
13.8%
31-35
2.8%
5.0%
7.2%
9.9%
13.8%
36-40
3.9%
6.6%
9.9%
13.8%
41-45
5.5%
9.4%
13.8%
46-50
7.7%
13.8%
51-55
13.8%
Example of the proceeds payable
under the plan
Given:
 Monthly installment = RM 50
 Child’s age = 12 years old
 Maturity Age = 18 years old
Participant
Guardian
Death
1,000 +
Participant's
Account
(PA)
1,000 + 50 * monthly
= 1,000 + 50 * 6 * 12
= 4,600
Permanent
Disability
1,000
1,000 + 50 * monthly
= 4,600
Permanent Accident
25,000
-
Conclusions

Children are our responsibility from Allah

Education restores one’s true nature of khalifah

Takaful is the means of transferring risks which is
allowed by the Shariah.

Takaful enables a Muslim to cover one’s risk and at the
same time invest and save based on the principles
allowed by the Shariah.
WA ALLAH A’LAM
THANK YOU
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Philosophy of Takaful