Takaful is commonly referred to as Islamic insurance; The word Takaful originates from the Arabic word Kafalah, which means “guaranteeing each other”. The policyholders contribute collectively and mutually assist in order to share the harm or loss that may fall upon the group. The concept is in line with the principles of compensation, mutuality and co-operation, encompassing the elements of shared responsibility, joint indemnity, common interest and solidarity. All Takaful companies are fully Sharia’a Compliant and Takaful products and operations are supervised by a Sharia’a Advisory Council.

Both takaful and conventional insurance provide protection in the event of unforeseen events and contributions must be made to start the coverage. Insurance is the transfer of risk by an individual or an organisation, i.e. your business, to the insurance company. You or your organisation will thus be known as the policy owner. The insurance company receives payment in the form of premium and will compensate you in the event of covered losses or damages sustained by you. Takaful provides protection based on Shariah principles. By contributing a sum of money to a common takaful fund in the form of contribution ('Tabarru'), you will undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer a defined loss. Both insurance and takaful have similar basic principles. The insured must have a genuine financial interest in the covered risk, meaning you will incur a loss if the event occurs. Insurance or takaful contracts are based on utmost good faith. Thus, you as the certificate owner need to disclose all material information required. If any of the relevant material facts are not disclosed, the certificate may be invalid, and you will not be protected against any loss or damage.

Takaful Operators offer both General Takaful and Family Takaful (life Insurance) products which are made to suit the needs of all people. Takaful products and services are generally like conventional insurance products but must be in line with the principles and practices of Islamic Shariah law as well as ethical standards. In this regard, the takaful products shall not by any means involve any elements that are not inline with the Shariah such as, alcohol, prostitution, gambling and pork.

Mudaraba is a Takaful model based on profit-sharing between the policyholders and Takaful Operator in accordance with a pre agreed ratio.

Wakala is a contract that appoints someone to be the Participant’s Wakeel (Agent) for a certain fee.

The participant must complete and sign a proposal form for any Takaful contract, which forms the basis of the agreement. The Takaful policy outlines the terms, conditions, and claim procedures for reimbursement in case of loss.

Surplus refers to the excess of contributions over claims, plus investments return. Surplus sharing refers to the act of distributing the excess made among the participants of the Fund at the end of fiscal year.

The relationship among the members of the Fund is that of co-operation for Mutual Benefit. The individual members contribute to an organized and professionally managed fund whose core objective will be for the welfare of the entire group. Thus, the relationship is one of strength & togetherness.

Non-Muslims can also purchase Takaful insurance, as it is widely recognised as an alternative to conventional insurance in both Muslim and non-Muslim countries.