Presentation of Takaful topic from Business finance subject

1. Takaful
Presented by: Muhammad Awais Khan

2. Takaful
• Takaful is a type of Islamic insurance wherein members contribute
money into a pool system to guarantee each other against loss or
damage.
• Takaful-branded insurance is based on sharia or Islamic religious law,
which explains how individuals are responsible to cooperate and
protect one another.

3. Difference
01
Conventional
Insurance
02
Islamic Insurance
Based on a buy and sell contract.
2. The subject matter of the contract which is concluded as a
buying and selling transaction contains unknown and uncertain
factors (Gharar).
3. The whole business is said to have semblance of gambling
as profit loss which is depend on ‘chance’.
4. conventional contract is insurance financial a exchange
contract.
5. The aim of conventional insurance operation is profit making.
6. In conventional insurance the elements of Gharar, Maysir
and interest exist.
1. Must not be based on buy and sell contract.
2. 2. The subject matter of the contract must be definite, clear
and transparent so that it is known to all parties of the
contract.
3. 3. The system contain the element of shared responsibility
enabling the spreading and sharing of profits or losses
among a group of members
4. 4. Islamic insurance contract is not a financial exchange
contract.
5. 5. The aim of Islamic insurance operations is to share and
distribute the risk.
6. 6. Islamic insurance is free of the elements of Gharar,
Maysir and interest.

4. Types of
Takaful
General Takaful and Family Takaful are
the basic types of Takaful

5. General Takaful
It provides protection on a short term basis,
normally covering a period of one year
.General Takaful offers all kinds of non-life
risk coverage. It is normally divided into
following classes: Property Takaful Marine
Takaful Motor Takaful Miscellaneous Takaful
01

6. Family Takaful
It offers a combination of protection and
long-term savings, usually covering a period
of more than one year.Family Takaful
provides protection and long-term saving
and investment opportunities. By having
family Takaful products, it will release the
financial burden on the family in times of
misfortune and return will be accumulated
from the investment account managed by
the Takaful operators. There are two main
types of family Takaful products, namely
individual family Takaful products and group
family Takaful products.
02

7. The Wakala Model
under this model, the operator charges a fee for fund management
and performance. This fee is determined by the Shariah advisory
board of the company. The Wakala model is basically used to
distinguish between the operating company (wakeel) and the
takaful fund.
Mudarabah model
The mudharabah model allows takaful operators to share in profit
in line with a pre-agreed ratio but not in underwriting surplus. The
absence of surplus sharing renders this model commercially
unviable.
Hybrid or combination of two model
Wakalah-Mudarabah (hybrid) Contract. Wakalah-Mudarabah is a
hybrid model. The takaful operator manages the investment
activities on behalf of policies holder and take a investment risk. In
this model, the operator can have both wakalah fee and profit
sharing.
Describe Three
models of Takaful?

8. Understanding surplus
in Takaful

9. Cont
Surplus Sharing is the sharing of underwriting surplus and investment
income between takaful operator and participants at the end of
certificate period following an agreed sharing ratio.While the
profits from investments will be distributed to both participants
and shareholders. Takaful operators make money through
performance fee or by sharing the surplus. But the total amount of
payment from the surplus that Takaful operators get cannot exceed
the amount that is paid to Takaful participants.

10. Use of Takaful products for hedging purpose
Takaful is a type of Islamic insurance wherein
members contribute money into a pool system
to guarantee each other against loss or damage.
It is available to everyone irrespective of status,
creed or religion. Zurich Malaysia offers takaful
plans that protect your financial needs and
those of your family and business.
What are takaful products?
Why do we need general takaful products?
Participants and businesses who want to
secure their residential property, vehicle,
business establishment, etc., can opt for a
general takaful plan. It offers protection of
properties, business assets and any liabilites
arising from loss or damage.
] Unlike conventional insurance, which risk is
transferred from the insured to the insurer, the
Takaful Insurance mutual risk is shared
amongst the participants. Takaful operations
are based upon the principles of mutuality,
whereby each participant makes a donation to a
Takaful fund.
What is the unique features
of takaful products?

11. Thanks