This document provides an overview of family takaful (Islamic insurance). It discusses that family takaful aims to save for long-term financial goals like education and disability. Contributions are split between participants' accounts for mutual aid and savings/investments. The two main models are mudarabah, where profits are shared, and wakalah, where the operator receives fees. Family takaful provides protection for dependents in cases of death. It can be individual or group plans. Benefits include maturity payouts, accident coverage, and critical illness. Operational risks include market fluctuations, liquidity issues, and non-compliance with sharia law.

1. ISLAMIC LAW OF
INSURANCE
AN OVERVIEW ON FAMILY
TAKAFUL
(GROUP 7)

2. Our Team
MUHAMMAD SHAHRIL BIN HAJA MOHAIDEEN (060507)
MUHAMMAD HAZIQ BIN MOHD ZABIDI (059703)
NAJMI ALIF BIN ABDUL JABBAR (061183)
MUHAMMAD HAFIDZ BIN KHAIRIL ANWAR (060006)
AHMAD ZUHDI BIN CHE KAMAZUKI (059818)

3. Topic
FAMILY TAKAFUL

4. Family Takaful is a long-term policy aimed at saving for future
expenses. It acknowledges the significance of planning for long-
term financial objectives, such as children's education and
disability compensation. In addition, it provides financial
protection against risks.
Background

5. Under Family Takaful, the contributions made by Takaful
participants serve two primary purposes...
Contributions to a Family Takaful program serve
a dual purpose: first, as donations to participants
to help finance mutual indemnity; and
As savings and investments to help participants or their
families plan for the future and ensure their financial
stability in the here and now.
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6. the process...
Contribution of Takaful Products (TP)
Participant's Account (PA) =
Money invested into a Shariah-
compliance business
Participant's Special Account (PSA) =
Money can be claimed for insured
losses, by TP @ their family....in case of
death occurs.
Takaful Family (TF)

7. Common Family Takaful Models
Mudarabah Model
Mudarabah's Participant's Account (PA) holds participants'
contributions. Participants contributed to this account.
Distribution of Surplus: A pre-agreed profit-sharing ratio
splits the PA's investment surplus between participants and
the Takaful operator. The Takaful operator is the Mudarib
(entrepreneur) and the participants are the Rabb-ul-Maal
(capital provider) in a Mudarabah arrangement for surplus
distribution.
The Participant's Special Account (PSA) may receive a share
of the surplus after distribution. Participants can use PSA
bonuses and rewards to improve their coverage or policy
value.
*Both PSA and PA will be invested in Shariah-compliance
investment by Takaful Operator
However, in the Wakalah model, the Takaful operator is
compensated for its services through a Wakalah fee
(management fee). This fee covers the costs of managing
and administering the Takaful operations.
Participant's Account (PA): In the Wakalah model,
participants' contributions are also placed in the
Participant's Account (PA) similar to the Mudarabah mode
Participant's Special Account (PSA): Similar to the
Mudarabah model, a portion of the contributions may be
allocated to the Participant's Special Account (PSA). The
PSA can be used to provide additional benefits or bonuses
to the participants, enhancing their coverage or policy
value.
Wakalah Model

8. Rationale behind Family Takaful
Provide a material safeguard for
offspring (children)
Provides a future material security for
widows and dependents of the deceased.
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Guarantees a future material protection
for peoples like orphans.

9. Rationale behind Family Takaful
Having a life insurance policy provide
protection from material difficulities for
widows, orphans, etc
An initiative in reducing poverty rates +
contributing towards a better life.
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Ensures mutual cooperations and a brotherly
feeling towards others in society.

10. Rationale behind Family Takaful
An initiative towards a self-reliant
society, minimizing hardships and
difficulties and enhancing economic
growth in society = resulting
elimination of hardships + bring
comfort to life.
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11. family TP in
markets
Individual Family Takaful: focuses on providing personalized
coverage to an individual and their family members.
Individual Family Takaful protects individuals and their families
financially. It protects individuals and their dependents from death,
incapacity, severe sickness, and medical costs. Customized coverage
options fit the individual's needs. Individual donations build a fund for
emergency aid. Individual Family Takaful provides specific protection
for the individual and their family against unexpected crises.
Group Family Takaful: caters to a collective group of individuals,
offering coverage for the entire group.
Group Family Takaful protects a group of people, like firm employees
or organization members. It covers life, accidental death and disability,
and medical expenditures for group members. Members or employers
contribute to a fund. According to the group Family Takaful plan, the
fund covers and assists group members when needed. Group Family
Takaful makes insurance for members and employees easy and
affordable.

12. Benefits
Participants Account (PA) in Family Takaful provides
financial protection and risk sharing for covered risks.
Participants Special Account (PSA) offers bonuses, policy
value growth, and customization for savings and long-term
goals, enhancing coverage and providing additional
benefits to participants and their families.

13. Benefits of Family Takaful
Maturity Benefit
Accidental Death & Disability Supplementary
Benefit
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Critical Illness (CI) Supplementary Benefit

14. Benefits of Family Takaful
Monthly Income Benefit
Marriage Supplementary Benefit
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School Fee Waiver Benefit

15. Operational Issues
that may arise
Market Risks Liquidity Risks
Shariah
Non-Compliance Risks

16. Market Risks
The possibility of the difference between the actual rate of
return and the expected rate of return can occur as with any
other business endeavours.
According to Prudential BSN Family Takaful, the company's
primary market risk exposure is the decline in the value of the
company's stock market holdings.
The change of market prices, such as stock prices and profit
rates, can hurt the company's financial assets and obligations.
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17. Liquidity Risks
Known as "the risk of financial loss to a Takaful undertaking
arising from the undertaking's inability either to meet its
obligations or to fund increases in assets as they become due
without incurring unacceptable costs or losses."
All three Funds - the Participant's Investment Fund, the
Participants' Risk Fund, and the Shareholder's Fund — may be
subject to liquidity risk at some point in the future.
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18. Shariah Non-Compliance Risks
Takaful providers are responsible to comply to shariah
principles in their undertakings of investment and assets. The
regulations to ensure that they are compliant result in limited
investment opportunities and even risks of losing current
investment options due to revision of Shariah laws over new
commodities.
Nature of Family takaful which is longterm and requires savings
proves to be a challenge for providers to sustain considering the
current lack of shariah compliant investment instruments globally
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