About Takaful
overview
Learn about Takaful
At Salama, we believe in providing ethical and inclusive insurance solutions that adhere to Islamic principles while allowing you to manage and protect your financial needs. Takaful offers an alternative to conventional insurance that adheres to Islamic principles and operates on the values of cooperation, mutual assistance, and ethical investment, by spreading risk across a pool of contributors.
Key principles
of Takaful
While the exact timeframe may vary, it is widely believed that the concept and practices of marine Takaful were prevalent as early as the 14th century, and possibly even earlier. This historical background underscores the longstanding tradition of cooperative risk-sharing in Islamic societies, which laid the groundwork for the development of modern Takaful principles.
The core principles of Takaful are:
- Takaful encourages solidarity and mutual support among policyholders (Contributors) for their collective welfare.
- In Takaful, every policyholder contributes to a common fund, ensuring that those in need of assistance receive support.
- Losses and liabilities are shared among policyholders through a pooling system, promoting collective responsibility.
- By spreading risks across a pool of participants, Takaful eliminates the burden of unforeseen losses falling solely on individual policyholders.
- Uncertainty in subscription and compensation is eliminated, as contributions are based on the principles of donation.
- Policyholders do not seek personal advantage at the expense of others; instead, they contribute to the common good.
- Investments are made in Shariah-compliant funds, aligning with Islamic financial principles.
- Takaful funds are invested ethically, in accordance with Shariah guidelines, ensuring that investments are socially responsible and morally sound.
Operational framework of Takaful
- Under Takaful, policyholders collectively insure and are insured. Contributions are made to a Takaful Fund, managed by the Takaful operator, which acts on behalf of policyholders.
- Scientific principles are employed to calculate contributions, ensuring fairness and accuracy.
- Takaful operators assess risks scientifically, ensuring that contributions are proportional to the level of risk.
- Policyholders allow the Takaful operator to utilize Tabarru (donations) from the Takaful Fund to compensate losses incurred by other policyholders.
- Surplus funds, after deducting Tabarru and charges, are distributed among policyholders, fostering a sense of community and fairness.
- In case of a deficit, the Takaful operator arranges interest-free loans (Qard Hassan) to cover the shortfall.
- These loans can be repaid from future surpluses, if any, generated in subsequent years.