Importance of the Council.
Islamic Insurance
Concept of Takaful.
Roots of Takaful
The Difference between Conventional Insurance and Takaful The Fatwa on Takaful
Islamic Banking & Financing
Savings - Al Wadiah
Investment - Al Mudharabah
The majority of Islamic scholars regard conventional system of insurance as not permissible because it contains two elements, namely Gharar, Riba. According to Islamic Fiqh, it is not permissible if one party's profit can be predetermined and is known, while the other is not. For example, the premium of an insurance company is usually determined beforehand and predetermined whilst the policyholder's profit or compensation is not certain. Gharar usually leads to Maisir (Gambling), which is also not permissible. The other element is Riba, the amount collected through premiums is deposited in interest based accounts of conventional banks, from which interest is earned and from this interest, compensation is reimbursed to the policyholders. In short, Islam does not object to Insurance per se, it is the elements of Gharar and Riba that is imbedded in insurance that must be eliminated,
Islam ensure fairness and just trade. To ensure this practices, first the imbedded Gharar and Riba must be dealt with. Takaful operators uses the contracts (akad) of Tabarru' (donation) and Mudarabah (investment) to ensure the participant has a distinct advantage. It is therefore important to understand the core nature of takaful.
The view of the Syariah is that, if a takaful company operates on the basis of mudarabah (profit and loss sharing) then the takaful operator can appoint either a marketing personnel to market the products whereby payments made to them could come from either shareholder funds or from the takaful funds. The latter is allowed provided the wages or commission paid to these officers and agents can be construed under the necessary management expenses. In this case, all expenses can be reimbursed from the gross profit of mudarabah, if any, or from the capital or the fund. This is in accordance with the views of the majority of Islamic schools of law. On the other hand, if a takaful operator were to operate on the basis of wakalah (agency), then it is permissible for the takaful operator, being the agent, to appoint another agent with the permission of the participant. In this case, the commission either to the principal (operator) or agents or subordinate agents could be paid directly from the takaful fund. This is also in line with the Syariah legal maxim or jurisprudence, for the agent appointed by the principal agent has now become the de facto agents for the participants.
Are non Muslims allowed to participate in Takaful and Islamic Funds ? Before that is answered, let us look at Islam itself. God is Great. Islam promotes modernization and growth for mankind and promotes the truth. Hence when mankind searches the truth, he will find it, if God will, Insya Allah.
