Takaful

Question 1

LEGAL DEFINITION OF TAKAFUL

Answer 1

An arrangement based on mutual assistance under which takaful participants agree to contribute to a common fund providing for mutual financial benefits payable to the takaful participants or their beneficiaries on the occurrence of pre-agreed events.

Question 2

BASIC DESCRIPTION OF TAKAFUL

Answer 2

Concept: Tabarru’ (donation)
Type of contract: Unilateral

Takaful Participants contribute via tabarru’ to the takaful fund. Takaful Operator then will manage the fund for a fee or share in profits on investment.

Question 3

BASIS OF TAKAFUL

Answer 3

1. Surah Al-Maidah
   
   • essence of takaful is mutual help (ta’awun)
2. Hadith “tie your camel..”
   
   • importance of risk mitigation
   • basis of tawakal
3. ta’awun, ukhuwah, tabarru’

Question 4

LEGAL MAXIM

Answer 4

1. Damage or harm must be removed

2. Do not inflict harm or reciprocate harm