Takaful is an Islamic insurance system based on mutual assistance and cooperation. It avoids elements of conventional insurance like uncertainty (gharar), gambling (maisir), and interest (riba) that conflict with Sharia law. Takaful operates using the principle of tabarru', where members donate part of their contribution to help fellow members facing hardships. Any profits made are shared among members rather than going to shareholders. This eliminates gharar and makes the system compliant with Islamic rules on commercial transactions.

1. Question: 3
Takaful
Takaful is an Arabic word meaning promising one another or joint assurance. The principle center
of the Takaful framework – the angle that makes it liberated from vulnerability and betting – is
Tabarru', which implies gift, blessing or commitment. Every member who needs insurance must
be propelled by the earnest goal to give to different members confronted with troubles. Islamic
protection is the framework whereby every member contributes into a store that is utilized to help
different members, with every member contributing adequately adds up to cover anticipated cases.
Takaful accentuation solidarity and collaboration among members. The goal of Takaful is to pay
a characterized misfortune from a characterized support. So Takaful is protection rehearsed under
Sharia'a standards.
Parties involved
In Takaful, there are usually four parties involved:
1. The participants;
2. The Takaful operators;
3. The insured;
4. The beneficiaries
ISLAMIC ISSUES WITH CONVENTIONAL INSURANCE
Conventional insurance contains components conflicting to Islamic Sharia'a, especially gharar,(
vulnerability) maisir(gambling) and riba (intrigue). The conventional insurance contract contains
vulnerability, it is contended, as respects whether the top notch will be paid as guaranteed and the
way that the specific measure of the premium and the specific time it will be paid later on are
additionally not known. Any type of agreement that is unbalanced for one gathering to the
detriment and expected out of line misfortune to the next is delegated gharar. Also, if a case isn't
made, the conventional insurance organization may just keep the premiums and the member
neglects to get any money related benefit at all. Likewise the loss of premiums on crossing out of
a disaster protection strategy by the policyholder is viewed as crooked.

2. The twofold standard state of charging a client for a brief period all in all insurance, while just a
relative discount is made if the insurance organization ends the spread, is likewise viewed as
shameful Islamically.
Conventional insurance additionally includes betting, it is contended, in light of the fact that the
member contributes a modest quantity of premium in the desire for increasing a huge entirety if
the safeguarded misfortune really happens. Furthermore, the member just loses the cash paid for
the premium if the protected occasion doesn't happen. Aside from the abovementioned,
conventional insurance likewise includes intrigue, in light of the fact that a component of intrigue
exists in conventional life coverage items. Installments to the recipients of life coverage for the
most part get salary from annuities dependent on putting resources into enthusiasm bearing
instruments. This component of riba is carefully illegal in Islam.
How Tabarru’ Eliminates the Problems of Conventional Insurance
Tabarru' is the understanding by a member to give up, as a gift, a specific extent of the Takaful
commitment that he concurs or embraces to pay, along these lines empowering him to satisfy his
commitment of shared assistance and joint assurance, should any of his kindred members endure
a characterized misfortune. The idea of Tabarru' wipes out the component of vulnerability (gharar)
in the Takaful contract. The thinking behind this is that gharar doesn't exist in the Tabarru'
relationship, as indicated by the Maliki School of Islamic law. The sharing of benefit or surplus
that may rise up out of the activities of Takaful is made simply after the commitment of helping
the individual members has been satisfied. Consequently, the activity of Takaful might be
imagined as a benefit sharing undertaking between the Takaful administrator and the individual
individuals from a gathering of members. Insurance can only have a place in the Sharia’a if it is
approved by the Sharia’a board,meaning that it has to be practised based on shared responsibility,
mutual cooperation and solidarity, designed to safeguard against a defined risk.

3. Question 2
Ijma
Ijmāʿ is an Arabic expression alluding in a perfect world to the agreement of the ummah (the
network of Muslims, or devotees of Islam). This idea is principal to Sunni Islam, which respects
expert in issues of religion and furthermore in legislative issues as having a place corporately with
the entire ummah, or network. No single individual can guarantee an extraordinary or special right
of translation, or of figuring out what is or isn't a bona fide Islamic practice or conviction. By and
by, it has regularly been researchers who have guaranteed the option to practice ijma', albeit
numerous essential fundamentals of Islam were set up by network accord, for example, the
political framework known as the caliphate, the authoritative assortments of hadith (acts and
expressions of Muhammad), the five columns, acknowledgment of the four legitimate schools.
Any lawful conclusion utilizing similarity or another instrument of lawful thinking likewise must
be acknowledged by ijma' before it very well may be fused inside Islamic Law. Numerous Muslims
respect ijma', along with the rule of shura (discussion) as basically fair goals inside an Islamic
structure where lawmaking is awesome, not a human privilege but rather where people must
decipher what God says through God's disclosures.
Consensus or agreement. One of four recognized sources of Sunni law. Utilized where the Quran
and Sunnah (the first two sources) are silent on a particular issue. There is considerable debate
concerning whose opinions are relevant for ijma. Some argue that only the opinions of scholars
are relevant. Others contend that ijma includes the consensus of the laity. Most agree that the
consensus of Muhammad 's Companions, the people of Medina, or the family of the Prophet is

4. authoritative. Once an ijma is established, it serves as a precedent. According to the majority of
jurists, a decision based on ijma generally cannot override a statement of the Quran or the Sunnah.
The binding force of ijma is based on a hadith in which the Prophet Muhammad is reported to have
said, “My community will never agree on an error.” In Twelver Shiism, consensus is neither an
infallible sanctioning instrument nor a source of law. Ideas of consultation (shura) and
parliamentarianism are used in attempts to formulate a theory of consensus useful in the modern
world.
Qiyas
In Islamic law, the conclusion of legitimate solutions from the Quran or Sunnah by analogic
thinking. Qiyas gave old style Muslim law specialists a strategy for concluding laws on issues not
unequivocally secured by the Quran or Sunnah without depending on unsystematic feeling (beam
or hawa). As indicated by this technique, the decision of the Quran or Sunnah might be stretched
out to another issue given that the point of reference (asl) and the new issue (far) share a similar
employable or viable motivation (illa). The illa is the particular situation that triggers a specific
law without hesitation. For instance, the usable reason for the restriction against liquor is that it
inebriates the psyche. Accordingly, anything that inebriates the brain, for example, opiates, is
likewise denied by the utilization of similarity. Albeit different ways of thinking in Islamic history
have vivaciously discussed the authenticity of the utilization of relationship, qiyas has assumed a
focal job in the advancement of Islamic law. The four fundamental Sunni schools of law think of
it as one of the four principle wellsprings of law, different sources being the Quran, Sunnah, and
accord (ijma). The Jafari Shii of school of law, in any case, checks aql (reason) as a different
wellspring of law rather than qiyas. Different strategies for reasoning the law, for example, mafhm
al-nass (the away from of the content), tamthil (closeness or resemblance), istihsan (juristic
inclination), or istislah (thought of open intrigue), either unequivocally depend on qiyas or use
techniques for examination that are comparative in their way to deal with qiyas.
Ijtihad
Islamic lawful term signifying "free thinking," instead of taqlid (impersonation). One of four
wellsprings of Sunni law. Used where the Quran and Sunnah (the initial two sources) are quiet. It
requires intensive information on philosophy, uncovered writings, and lawful hypothesis (usul al-

5. fiqh); an advanced limit with regards to legitimate thinking; and careful information on Arabic. It
is viewed as a necessary strict obligation for those certified to perform it. It ought to be rehearsed
by methods for analogical or syllogistic thinking (qiyas). Its outcomes may not repudiate the
Quran, and it may not be utilized in situations where agreement (ijma) has been reached, as
indicated by numerous researchers. Sunnis accept ijtihad is untrustworthy since more than one
translation of a lawful issue is conceivable. Islamic reformers require a renewal of ijtihad in the
advanced world.
Question 4
Ijarah
Ijarah is a term of Islamic fiqh. Lexically, it means ‘to give something on rent’. In the Islamic
jurisprudence, the term ‘ijarah’ is used for two different situations.
First condition
Firstly, it means ‘to employ the services of a person on wages given to him as a consideration for
his hired services.’ The employer is called musta’jir while the employee is called ajir.Therefore, if
A has employed B in his office as a manager or as a clerk on a monthly salary, A is musta’jir, and
B is an ajir. Similarly, if A has hired the services of a porter to carry his baggage to the airport, A
is a musta’jir while the porter is an ajir, and in both cases the transaction between the parties is
termed as ijarah. This type of ijarah includes every transaction where the services of a person are
hired by someone else. He may be a doctor, a lawyer, a teacher, a labourer or any other person
who can render some valuable services. Each one of them may be called an ‘ajir’ according to the
terminology of Islamic law, and the person who hires their services is called a ‘musta’jir’, while
the wages paid to the ajir are called their ‘ujrah’.
Second Condition
The second type of ijarah relates to the usufructs of assets and properties, and not to the services
of human beings. ‘Ijarah’ in this sense means ‘to transfer the usufruct of a particular property to
another person in exchange for a rent claimed from him.’ In this case, the term ‘ijarah’ is analogous

6. to the English term ‘leasing’. Here the lessor is called ‘mu’jir’, the lessee is called ‘musta’jir’ and
the rent payable to the lessor is called ‘ujrah’.
Question 1
1. Interest based financing
2. Capitalism
3. Dividends
4. Riba
5. Riba al fadl
6. Tijarti sood
7. Musharakah
8. Profit
9. Mudarabah
10. Shahmeer will get 2 million and khan will get 3 million
11. UBL will be mudarabah and Al Razi company will be musharakah
12. Credit Limit
13. Ijarah
14. Mutual fund
15. Salam
16. Istisna
17. Letter of credit
18. L/C Opening bank
19. L/C advising bank
20. L/C confirming bank
21. L/C negotiating bank
22. L/C reimbursing bank