Mysteries of Takaful Revealed – Part 2

In the concluding part of Takaful, Fathimatul Zahra highlights the salient features of Family Takaful


As mentioned in the Part 1 of this Article, the growth of the takaful industry is reflected in the variety of products offered in the market. The final part of this Article will touch briefly on the different types of Takaful products offered, giving special emphasis to Family Takaful.


Generally, there are two categories of takaful products, namely General Takaful and Family Takaful.



General Takaful

General Takaful encompasses protection schemes such as fire, motor vehicle and property which are similar to general insurance business under the conventional insurance system.



Family Takaful

Family Takaful is the Islamic equivalent of life insurance under the conventional insurance system. However, there are striking differences with conventional life insurance, especially from nomination and distribution aspects upon the death of a participant.


As a starting point, it should be noted that life insurance is prohibited in Islam as the human soul cannot be protected by way of insuring it as no monetary value can be ascribed to it.



Remodeling of Life Insurance

The Shariah model of life insurance is not aimed at protecting the soul of the participant but is a financial technique to provide financial security for the widow(s), children and other dependents of the deceased participant ("participant") against a future unexpected financial risk. Hence it is described as Family Takaful (protection of the deceased’s family and dependents).


The underlying principle of Family Takaful is that it is not a policy to insure a person’s life but is a financial transaction based on the principles of mutual cooperation to undertake a responsibility towards protecting widows, children and other dependents of the participant from future financial difficulties.


Unlike conventional life insurance which involves riba’ (interest) and other elements which are prohibited in Islam, Family Takaful is free from elements of riba’ and operates along the principles of the al-Mudhrabah and at the same time, conforms to the principles of al-Mirath (inheritance) and al-Wasiyah (bequest).



Beneficiaries under Family Takaful

If the participant is alive at the maturity of the policy, he/she is entitled to claim from the takaful operator, a portion of the contribution (deposited as savings) and the share of profits derived from the contribution plus bonus and dividends according to the policy practiced by the takaful operator.


On the other hand, if the participant dies before the maturity of the policy, the nominee is entitled to all of the above-mentioned benefits as well as an additional donation by the takaful operator from its takaful fund (tabarru’), usually described as "Participants Special Account", according to the financial condition of the beneficiary(s) of the participant.


However, under the Islamic model of life insurance, the nominee is not the absolute beneficiary of the benefits under the policy. Instead, he is a mere trustee who is under a duty to obtain such benefits and distribute them among the heirs of the participant according to the principles of al-Mirath and al-Wasiyah.



Cause of Death

Perhaps the most interesting feature of Family Takaful is that the death of the participant does not necessarily have to be natural or accidental, but may be due to any cause, including suicide or murder.


The nominee is entitled to claim the benefits under the policy so long as the death of the participant is proven. This is because the death of a person is determined by Allah. As regards the act of suicide and other criminal acts, the person committing such acts is himself accountable and answerable to Allah. Hence, the participant is not deprived of his other rights regardless whether he is innocent or is a criminal.


As a corollary to the above, a participant’s beneficiary(s) under Family Takaful will not be deprived of the participant's entitlement even if the latter commits a criminal act that resulted in his death.




To summarise, Family Takaful is aimed at protecting the dependents of the participant rather than to put a value to a person’s life and insures it for its money worth. The protection is accorded to the participant’s dependents and is derived from the monetary contributions (and benefits accruing thereon) made by the participant during his lifetime, which is in essence a form of saving.


So, save and be safe, folks!


Fathimatul Zahra binti Mustapha

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