What is TABARRU concept?

 Takaful-ContributionTabarru' in Arabic means donate, give away or contribute.
Under The Mudharabah Takaful model, the participants agrees to pay installments for the takaful fund as contribution (premium) to the takaful operator, which is agreed to be a mutual joint guarantee to help uncertainty or loss faced to any of the contributors.

Takaful Insurance Principles

  Below are the Principles of Takaful Insurance:

  • Policy holders cooperate among themselves for their mutual good.
  • Policyholders contributions are considered as donations to the takaful fund (pool)
  • Every policy holder pays his contribution (premium) to help those who need assistance.
  • Losses are divided and liabilities spread according to the community pooling system.
  • Uncertainty is eliminated concerning subscription and compensation.
  • It does not derive advantage at the cost of others.

As agreed by most contemporary Islamic scholars,  Conventional Insurance is strictly disallowed for Muslims as it contains below factors:

  •     Al-Gharar (uncertainty)
  •     Al-Maisir (gambling)
  •     Riba (usury)

There are basic 4 models how Takaful Concept can be implemented:

  1. Mudharabah model (profit-sharing).
  2.  Wakala model.
  3.  Combination of both Mudharabah and Wakala.  
  4.  Al Waqf model.

Islamic Takaful Insurance

What is Islamic Takaful Insurance?

takaful-insuranceTakaful Insurance is a sharīʿah (islamic Law) complaint insurance system where reimbursement or repayment in the event of a loss to your business is compensated from a takaful fund where contributors agree to donate small regular 'tabarru' or contributions to an islamic or takaful insurance operator.

Takaful is a word derived from the Arabic word “Kafala” meaning guarantee, warrant or an act of securing one’s need. Therefore, it is a mutual guarantee to help each other against a defined loss.

Takaful concept was first practised by the Muhajirin of Mecca and the Ansar of Medina following the hijra of the Prophet Mohamed SAAW over 1400 years ago.

Since the Takaful Insurance concept is different from the conventional insurance concept, Takaful Insurance should always be followed by the principles of takaful and managed separately from conventional insurance concept, including the fund.