Takaful is an Arabic word derived from the Arabic root-word 'kafala' or ‘Kafalat’, which means guarantee or responsibility and it implies “togetherness”. Takaful is not only a tool to mitigate loss, give financial protection, and give halal profits which is provided by a fund created by the participating members who contributed and agreed to assist each other. It is an ideology which promotes:
Solidarity and joint guarantee.
Self reliance and self sustainability for community well being.
Assistance to those that need it.
Community pooling system.
Alternative to conventional insurance as approved by all Muslim scholars.
The Takaful system is based on the principles of fairness, and is committed to serving one another sincerely and truly so that all parties benefit. What is unique about this concept is that the underwriting profit is shared among all participants who have a positive contribution during the year.
The term “Wakala” is derived from the word “Wakeel” which means “Agent” or on behalf of some body. Wakala fee is the fee charged by the Takaful Operator from the participant to manage the Participant Takaful Fund.
When a participant makes a contribution towards a Family Takaful Product their contribution is divided into a risk component and an investment component. The investment component is put into the Participant’s Investment Fund. This is then invested in Shariah compliant products.
When a participant makes a contribution towards a Family Takaful Product their contribution is divided into a risk component and an investment component. The risk component is put into the Participant’s Takaful Fund. In the case of any claims payments are made from this fund.