Concept of Takaful
Takaful is an Arabic word which means "Joint or Mutual Guarantee". Takaful works on the basis of brotherhood & mutual co-operation and is a Halal risk mitigation tool, which is serving as an alternative of conventional insurance.On observing Joint-Family System and Co-operative Societies, we find them as very common examples of Takaful in our society, in which different types of Risks including Financial Losses are distributed amongst the participants and help is mutually extended to each other in times of need. Exactly same happens in the structure of Takaful in which participants pool their resources so that they might be able to help each other in the time of need.
Takaful Working Structure
Islam is a complete religion and guides us in all aspects of life. It also has a set of rules for conducting financial affairs in human society. Riba (i.e. usury), Maisir (i.e. gambling) and Gharar (uncertainty) are don’ts as per Islamic Rules.In Takaful, it is ensured that these all don’ts have been removed from all investments and transactions wherever they are not allowed, for which a Shariah Board of Ulemas is responsible. That’s why a member gets satisfaction that all the transactions of Takaful operator are according to Islamic Rules and they regards Halal and Haram in every investment.
Family Takaful operators provide two major financial services for members. First is Takaful Waqf Account: The account in which contribution/donation amount of all members' pools and from this account members gets agreed benefits in case of any mishap as per conditions decided in Takaful Plan. Second is the Participant’s Investment Account: After giving contribution/donation in Takaful Waqf Account remaining amount, which is than present in PIA (Participant’s Investment Account) is invest by Takaful Operator. Takaful Operator invests this amount as Mutual Funds in Shari’ah compliance businesses in order to turn them into big funds on long term for the members Financial Needs.
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