Insurance and Takaful Flashcards
What is Insurance?
Insurance companies provide people financial protection by evaluating the potential risks that may occur in a specific category like life insurance, general insurance, and more.
These premiums are charged monthly and based on your risk profile it may vary on what particular insurance may be applied.
Example: A man who owns multiple cars and has a history of reckless driving will have an auto policy than a person with one car and a low-risk profile.
What are the insurance policies that are required in Malaysia?
Motor insurance is mandatory under the Road Transport Act 1987. To ensure victims of road accidents are compensated by errant drivers.
Professional indemnity is mandatory for legal professions like licensing professional insurance brokers and financial advisors.
What is Takaful?
It is an Islamic Insurance wherein members contribute to a pool system to guarantee each other against losses or damages.
Unlike most commercial insurances, Takaful must operate under Islamic cooperative principles or known as Shariah. It was created to replace most insurance companies that go against Islamic Restrictions on Riba (Interest).
What is Shariah?
Islamic law is a religious law forming part of the Islamic tradition. Based on the teachings of the Koran and the traditions of the Prophet, prescribing both religious and secular duties and sometimes retributive penalties for lawbreaking.
What is SAC about? (Shariah Advisory Council of Bank Negara Malaysia)
The SAC consists of prominent Shariah scholars, jurists, and market practitioners, who have a deep background experience with the application of Shariah in the areas of Islamic economics and finance.
SAC has the authority to ascertain Islamic law for many different businesses based on Shariah principles and it is regularly supervised and regulated by Bank Negara Malaysia.
SAC is also responsible for validating all Islamic banking and takaful products to ensure their compatibility with Shariah principles.
When was their role upgraded to handle Shariah matters?
The Central Bank of Malaysia Act 2009 has further reinforced their position pertaining to Islamic banking, takaful, and Islamic finance.
