takaful ifm

8/13/2019 Takaful IFM

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AHMAD MUSTAQIM BIN MAHASAN 207192

MOHAMAD AMIN BIN MOHD RADZI 207295RASULKHUJA RAKHIMKHUJAEV 211226NOOR ZUHAINIS BINTI MOHD JAMIL 215329MUHAMMAD AFIF BIN MUKHTAR 216555NADIAH BINTI MD KASSIM 217998

Welcome ToOur Group

Presentation !!


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The Council of Islamic Fiqh Scholars (1975)ruled that conventional insurance is prohibited

due to the presence of three main elementsnamely :

Riba(interest or usury)

Gharar(uncertainty)Maisir(gambling)


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1) Existence of al-Ribain Insurance :

There is the practice of al-Riba(interest) and otherrelated practices in the investment activities of the

conventional insurance companies which contravene therules of the Shariah.

2) Gharar may originate from :

Ignorance and lack of information over nature andattributes of subject matters.Doubt over its availability and existence.Doubt over its quantity.Lack of information concerning the price and terms of

payment (including currency to be paid).

Prospect of delivery (including vendors ability to makedelivery according to contract).

Uncertainty is present in conventional insurance because thevalue and timing of compensation cannot be determined andknown at the time the contract is made.


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Takaful is an Arabic word that means"guaranteeing each other".

It is a system of Islamic insurance based on theprinciple of Taawun(mutual assistance) andTabarru(voluntarily) where the risk is sharedcollectively by the group voluntarily.

This is a pact among a group of members orparticipants who agree to jointly guaranteeamong themselves against loss or damage to anyof them as defined in the pact.


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The Takaful principle :

1) Mutual responsibility :

The principles are illustrated through the followingHadithscompiled in Sahih Bukhari and Sahih Muslim.

The relationship between one believer and another islike that of a building where one part of the buildingstrengthens the other parts. A believer to another

believer is like a building where each part enforcesthe others.Each of you has a responsibility and each of you is responsible

towards those under your responsibility. Each one of you is aperson of responsibility, and each one of you is responsible forthose under your responsibility.


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2) Mutual cooperation :The principle of cooperation is

established through the QuranandSunnah.

E.g : Surah (al-Maidah : 2) and (al-

Baqarah : 177)E.g : The Sunnahhas alsoestablished the principle ofcooperation as illustrated in thecompilation of Hadithnarrated byAbu Dawood : whosoeverfulfils

the intention of a brother, Allahwill fulfill his intentions.


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3) Mutual protection :

From disasters. Disaster and prosperity

are both sent by Allah and theadvocating to help one another is foundin the following Hadithnarrated by Ibnu

Majah : indeeda believer who can givesecurity and protection to the life andproperty of mankind.


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Participants -

Contributepremium

The insured Participants who

face the risk

The operator Alicensed body whomanages the funds

according to Shariahprinciples

Thebeneficiaries

Those whobenefit from

the fund


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Beneficiary in a policy is usually determined on the

test of whether the person has an insurableinterest on the subject matter. This is determinedunder the following principles :

Al Milkiyah (ownership)Al Mirath (inheritance)Al Wasiyah (bequest)


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1) Al Milkiyah (ownership)

Under Takaful, the benefits of the policy are thesole ownership (Al Milkiyah) of the policyholder

while he/she is alive, except in instances ofWaqf(charitable trust). Under Waqf, theproperty becomes the ownership of Allah and nolonger belongs to an individual.

After death, the principle of sole ownershipremains true but the benefits of thepolicyholder is moved to the beneficiaries of theproperties left by the policyholder, as follows :

the total benefits are calculated togetherwith other wealth held by the policyholder.

the total wealth is used to pay off any

outstanding debts by the policyholder asdebts to other individuals is considered asdebtto creatures,which needs to be settledimmediately.

the surplus is to be used to pay off anyfuneral expenses, which should be separated

from the distributable surplus.


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2) Al Mirath (inheritance)

After deduction for paymentof debt, funeral expenses and

execution of the policyholderswill, the remaining property isto be distributed to the livingheirs according to Islamic law,

based on the pre-determinedshare, guided by the provisionsin the Quran.


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3) Al Wasiyah (bequest)

Of the surplus properties, only up to 1/3 of thesurplus can given away via a will. This is toreduce the possibility of injustice where thepolicyholder, while is the full owner of thebenefits of the policy when alive, may chooseto willawaythe whole surplus properties tothird parties or in favour of certain heirs and

not in favour of the policyholders rightfulheirs.

Therefore, under Islamic law, only 1/3 can begiven away as per policyholdersbequest.


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Non profit

Model

WakalaModel

WaqfModel


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Takaful products divide by two products such as :

1) General Takaful

Provide protection against damage or destruction to

property and related liability subjected to a one-year underwriting period.Motor TakafulPersonal accident TakafulHome Takaful

Medical and health TakafulMarine TakafulEngineering Takaful


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2) Family Takaful

Not meant to insure lives financialprotection for beneficiaries againstunexpected financial risk such as prematuredeath or total disability commonly linked

with saving plan.

Family Takaful divided into ParticipantsAccount (PA) and Participants Special

Account : Investment-linked Takaful Child education Takaful


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Re-Takaful is defined by the Malaysian TakafulAct. 1984 as an arrangement consistent with soundTakaful principles for Re-Takaful of liabilities inrespect of risks incurred or to be incurred by theTakaful operator in the course of his carrying on

Takaful business.A Takaful company is backed or reassure from any

insufficiency in meeting the claims by anotherTakaful company the percentage borne by thesecompanies is determined through mutual agreement.

Two coverage systems :the facultative : product- by -product coverage.the treaty system : covers the whole range of

claims.


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Issue Conventional Insurance TakafulOrganization Principle Profit for shareholders Mutual for participantsBasis Risk Transfer Co-operative risk sharingValue Proposition Profits maximization Affordability and spiritual

satisfactionLaws Secular/Regulations Shariahplus regulationsOwnership Shareholders ParticipantsManagement status Company Management OperatorForm of Contract Contract of Sale Cooperative,

Islamic contracts of

WakalahorMudarabahwith Tabarru

(contributions)Investments Interest based Shariahcompliant, Riba-

freeSurplus

Shareholders account

Participants account


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The Takaful industry is imminent from the projections

made. This will most definitely entice other players tojoin in, such as opening Takaful windows and creation ofretro-Takaful in the future.

The most important factors for successful operations

are the transparency of operations, the establishmentof Shariahcompliant products and robust Shariahsupervisory boards that guide product design andensure Shariahcompliance.

The Takaful industry is to improve efficiency and to reachcritical mass in order to benefit from the economies of scalethat are currently the privilege of only a handful of players.It is hoped that these will be met with the expansion of the

market and proper regulation.


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