Takaful

The work Takaful is derived from the Arabic root word Kafala meaning “mutual guarantee.” It is an Islamic system of mutual corporation built around the concept of “Tabarru” (voluntary contributions.) Each participant contributes to a fund to cover any losses, while also benefiting from a share of any surplus declared.
Get a Quote

How does "Takaful" work?

Your contribution for participation is pooled under one fund i.e. participant’s Takaful Fund and will be used to pay for any contingency should any of the members who participate in the scheme suffer any catastrophic loss, be it on their property or life. In other words, each member of the scheme essentially protects others by guaranteeing compensation from the Takaful Fund for the defined losses incurred by any members of the scheme.

Compliance with Shariah Principles

Takaful is based on the principle of cooperation (Ta’awun) and not sale or exchange which mitigates the objectionable aspects of gharar (uncertainty), maysir (gambling), and riba (interest). This is contrary to the conventional insurance, where policyholders pay premiums as a price for protection against loss. If a loss occurs, the policyholder will be protected. The policyholder will lose the premium to the insurance company if such a loss does not occur. With Takaful your contribution is an agreement with other members (participants) of the fund to mutually help each other by way of providing financial assistance should any member of the fund suffer a loss or disaster. Moreover, the Takaful fund invests your contribution in a Shariah-compliant manner avoiding any interest-based instruments. In addition, any surplus will be redistributed to the Participants. The Takaful operator therefore only Manages the Fund for the benefit of the participants.

We offer

  • Personal Takaful
  • Commercial Takaful
  • Motor Traders
  • Travel 
  • Hospitality 
  • Family Takaful

Risk

Risk is an undeniable fact of life. It enters into the equation the instant you start your life. And today that risk is greater than ever. In an environment that is as unpredictable as it is dynamic, you can no longer be certain that even a trip to the corner café will be safe.

The history of
“Takaful”

Takaful is not something new to the Islamic world. It has been going on for centuries, ever since the days of the Holy Prophet Muhammad (Peace Be Upon Him) and the early Caliphs.

As we know that in those days there were ships and trade caravans and they used to be exposed to the same risks that we face today. Ships could be sunk, caravans could be raided or catch fire etc. Given these dangers to trading activity, the early pioneers of Takaful were wise enough to formulate a system of mutual protection so that the members of a particular caravan or trade delegation could be assured of recovery in case they suffered a loss due to unavoidable circumstances. Thus the members of these trading enterprises would enter into a formal pact stipulating that in case of loss to one party, the others would contribute to make up that loss.

The only essential difference between Takaful at that time and Takaful today is that whereas they used to pay only after the loss, we today charge a considerate amount of what is known as a contribution before the loss, and at the end of the year after all the claims have been settled, it is returned back to the participants.
This early practice of Takaful or mutual indemnification even found expression in the first Constitution of Medina (Mithaq al-Madina) in the days of the Prophet and was the second system that was formally institutionalized by the Caliph Umar, the first being the Baitul Mal or Public Treasury. These developments at the state level meant that Takaful came to be formalized into a more secure system, with more accountability and more checks and balances. During this period, a number of Takaful products were evolved based not only around “Diyah” or blood money, but also “Da’waniyah” which was a sort of professional indemnity to governors and state functionaries.

Thus the system of Takaful became an integral part of trade and commerce in those days and this situation continued for several centuries upto the end of the First World War. The fall of the Ottoman Caliphate shortly thereafter meant that Takaful, along with the other state institutions that had safeguarded Muslim interests fell on bad times. While Takaful receded to the background, conventional insurance imposed by the western colonial powers took its place, and this continued for several decades. It was only in the 1970s with the revival of Islamic banking modes in the Middle East that modern-day Takaful also developed. The first Takaful company was set up in Sudan in 1979 which was almost simultaneously followed by another set up in Bahrain. The rapid growth of Takaful ever since, even in the non-Muslim world, only goes on to prove that it has withstood the test of time and is a viable alternative to conventional insurance.
Get a Quote