Important considerations in a Takaful System.

There are fundamental factors that must co-exist to establish the proper frame work for a Takaful system.

  • Niyah (Intention): utmost sincerity of intention for knowingly following guidance and adhering to the rules of a Takaful System.
  • Integration of Shari’ah Conditions:
    • Risk protection sharing under Ta’awun (assistance) principle.
    • Coincidence of ownership and participation in management by policy holders.
    • Avoidance of Riba and all the prohibited investments.
    • Inclusion of Mudaraba, Wakala or hybrid principles for Takaful management.
    • Presence of Moral Values and Ethics: business is conducted openly in accordance with utmost good faith, honesty, full disclosure, truthfulness and fairness in all dealings.
    • No unlawful element that contravenes Shari’ah and strict adherence to Islamic rules for commercial contracts.

Key elements to be present are:

      • Parties have legal capacity and are mentally fit.
      • Principle of indemnity prevails.
      • Payment of contribution is consideration of offer and acceptance.
      • Mutual consent.
      • Special time period of policy and underlying agreement.