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.