Types of Takaful

The general takaful concept is you contribute a sum of money to a takaful fund in the form of participative contribution (tabarru’). You will undertake a contract (aqad) for you to become one of the participants by agreeing to mutually help each other, should any of the participants suffer any form of misfortune, either arising from death, permanent disability, loss, damage or any other such misfortunes as covered under the takaful you personally undertake.

The takaful protection plan is based on Shariah principles and offers many unique features to policy owners. There are two types of takaful businesses: family takaful and general takaful.

You must have a legitimate financial interest in the subject matter to participate in a takaful plan. A takaful contract is based on the principle of utmost good faith (trust), whereby you need to disclose all material information required. You can only recover your financial loss and not gain any profit as a result of a quantifiable loss. In determining the compensation, the takaful operator will identify the actual most important cause that brought about the loss. After you have been compensated for your loss, the takaful operator has the right to claim from any third party responsible for your loss. If a loss is covered by more than one takaful plans or insurance policies, the takaful operator that has made payment to you may call upon other takaful operators or insurance companies to contribute proportionately to the payment.