DBIF2023 : TAKAFUL

CHAPTER 4 TYPE OF TAKAFUL

Prepared by : Nurul Atiqah Binti Mohd Rahim

Types of Takaful General Takaful Family Takaful

Family Takaful A family takaful plan is a combination of long-term

investment and a mutual financial assistance scheme.

The objective of this plan are as follows: To encourage saving on a regular basis over a fixed period of

time. To earn investment returns in accordance with Islamic principles. To obtain coverage from a mutual aid scheme in the event of

death of the participant prior to maturity of the plan.

The contribution paid by the participant is credited into two separate account

Participant Special Account (PSA) Participant Account (PA)

Participant Special Account PSA based on tabarru’ and donation concept.

The participant’s contribution that goes into the PSA will be used to fulfill the obligation of mutual help should any of the participants face misfortune arising from death or permanent disability.

If the participant survives to the date of maturity of the takaful plan, he or she will be entitled to share the net surplus from the fund, if any.

Participant Account PA is for saving and investment. The

fund in the PA account will be invested by the takaful operator.

The profit from the investment will be shared between the participants and the operator according to a pre-agreed ratio.

Family Takaful

Ordinary Family

Individual family Takaful

(individual)

Group Family Takaful

(employers, clubs, associations and

societies)

Annuity Investment-linked

General Takaful General takaful scheme is essentially for mutual financial assistance on a

short-term basis, usually 12 months.

The scheme is mainly to allow participants to be compensated for any material loss, destruction or damage to their properties or belongings by some mishap or misfortune.

Under this concept, all contributions made by the participants are placed in the general takaful fund on the basis of tabarru’ or donation.

This is quite different from family takaful where the contributions of the participants are divided and created into two separate funds, the PSA and the PA.

If at the end of the takaful period, a net surplus exists in the general takaful fund, the same shall be shared between the participants and operator on the basis of mudarabah (profit sharing), provided the participants havenot made any claim or receive any benefits for the policy.

The Islamic Financial Service Board (IFSB) defines general takaful as “…scheme which are basically contracts of joint guarantee on a short-term basis (normally one year), providing mutual compensation in the event of a specified type of loss. The schemes are designed to meet the needs for protection of individuals and corporate bodies in relation to material loss or damage resulting from a catastrophe or disaster inflicted upon real estate, assets or belongings of participants. The takaful contribution paid is pooled into the Participant Risk Fund (PRF) under the principle of Tabarru’ to match the risk elements of the business that are inherent in its underwriting activities….”

General Takaful

Home takaful scheme

Motor takaful scheme

Marine, aviation and transit

takaful scheme

Accident/ miscellaneous takaful scheme

Home Takaful SchemeHouseowner takaful scheme It covers the physical house against loss or damage

caused by floods, fires and other perils.

It also protects the garage, walls, gates and fences around the property as well as permanent fixtures and fitting

Householder takaful scheme Householder takaful covers the loss or damage to the

contents of the house.

This will include the furniture, television, jewellery, etc.

Motor Takaful Scheme Motor takaful scheme covers against loss or

damage to motor vehicles due to accidental fire, theft or accident.

It also covers bodily injury or death of a third party as well as loss or damage of a third party’s property.

There are two types of cover for a motor takaful plan, namely third party and comprehensive covers.

Motor takaful scheme

Third party cover Comprehensive cover

Accident/miscellaneous takaful scheme

Offered to the retail, services, manufacturing, communication, energy, agriculture sector, etc.

Type of accident cover by Takaful

Personal Accident Workmen compensation

Personal Accident Personal accident takaful is an annual plan that

provides the policy holders or their beneficiaries with compensation in the event of death, disablement or injuries arising from an accident.

Personal accident takaful can be taken for the individual or for his family.

It also available for short durations such as when one is travelling abroad, to cover the policy holder should any accident occur during the travel period.

Workmen Compensation Takaful

Workmen compensation takaful is mandated in most countries to protect those in the employment of others.

It only pays for accidents and injuries that are work-related.

All costs related to injuries that occur outside working hours will not be paid, unless those costs are related to an accident or injury that occurred while the employee was on the job.

Workmen compensation takaful provides the injured employees with medical coverage and income replacement.

Employers also benefit from offering a workmen compensation policy to their employees.

All costs of health care services provided to an injured employee will be taken care of by the workmen compensation takaful policy.

Benefit of Takaful Takaful has created products approved by shariah that offer almost

all kinds of risk coverage.

Family takaful scheme, which are long-term in nature, encourage participants to save regularly over a long period of time.

Under family takaful, there is a wide range of investment avenues like structured products that offer capital protection when held until maturity.

Family takaful gives muslim participants peace of mind and spiritual fulfillment because the are investing in a shariah compliant manner.

In family takaful, if a participant ends the policy midway, he will be given what is due to him in terms of the total contribution, plus the profits, if any, earned from the investment of the family contribution, plus whatever cover the takaful scheme offers.