1. Takaful Companies Conventional Insurance Companies
Takaful is based on mutual cooperation. Conventional insurance is based solely on
commercial factors.
Takaful is free from interest (Riba), gambling, Conventional insurance includes elements
(Maysir), and uncertainty (Gharar). of interest, gambling, and uncertainty.
All or part of the contribution paid by the The premium is paid
Participant is a donation to the Takaful Fund, to conventional insurance companies and
which helps other Participants by providing is owned by them in exchange for bearing
protection against potential risks. all expected risks.
Takaful companies are subject to the governing Conventional companies are only subject
law as well as a Shari’a Supervisory Board. to the governing laws.
There is a full segregation between the Premium paid by the Policyholder is
ParticipantsTakaful Fund account and the considered as income to the company,
shareholders' accounts. belonging to the shareholders.
Any surplus in the Takaful Fund is shared among All surpluses and profits belong to the
Participants only, and the investment profits are shareholders only.
distributed among Participants and shareholders on
the basis of Mudaraba or Wakala models.
In case of the deficit of a In case of deficit,
Participants’ Takaful Fund, theTakaful operator the conventional insurance company
(Wakeel) provides free interest loan (QardHasan) covers the risks.
to the Participants.
The Plan Owners’ and shareholders’ capital is The capital of the premium is invested in
invested in investment funds that are Shari’a funds and investment channels that are
compliant. not necessarily Shari’a compliant.
Takaful companies have re-insurance with Re- Conventional insurance companies do not
Takafulcompanies or with conventional re- necessarily have re-insurance with re-
insurance companies that adhere to certain insurance companies that abide by Shari’a
conditions of Shari’a. principles.