The takaful market has become more diverse with a tremendous increase in the number of takaful operators worldwide. In overall, the growth of takaful has been consistently increasing since 2010. Nevertheless, there is a slight difference between family takaful and general takaful growth, unfavorably the family takaful. Thus, this research is carried out to examine the significant factors influencing the choice of family takaful among its participants. For that purpose, one takaful operator has been sampled out. The findings relate to three contributing factors to the demand of family takaful products; benefits, product features and quality services. Based on the findings, takaful operator should focus in improving the takaful agents’ knowledge

1. http://www.iaeme.com/IJCIET/index.asp 820 editor@iaeme.com
International Journal of Civil Engineering and Technology (IJCIET)
Volume 10, Issue 02, February 2019, pp. 820–825, Article ID: IJCIET_10_02_079
Available online at http://www.iaeme.com/ijciet/issues.asp?JType=IJCIET&VType=10&IType=2
ISSN Print: 0976-6308 and ISSN Online: 0976-6316
©IAEME Publication Scopus Indexed
SIGNIFICANT FACTORS INFLUENCING THE
CHOICE OF FAMILY TAKAFUL
Rafeah Saidon
Academy of Contemporary Islamic Studies,
Universiti Teknologi MARA, Shah Alam, Malaysia.
Abdullah Ramly
Faculty of Business Management,
Universiti Teknologi MARA, Kampus Puncak Alam, Malaysia.
Amal Hayati Ishak
Academy of Contemporary Islamic Studies,
Universiti Teknologi MARA, Shah Alam, Malaysia.
Mohd Zaki Razaly
Academy of Contemporary Islamic Studies,
Kampus Segamat, Johor, Malaysia.
ABSTRACT
The takaful market has become more diverse with a tremendous increase in the
number of takaful operators worldwide. In overall, the growth of takaful has been
consistently increasing since 2010. Nevertheless, there is a slight difference between
family takaful and general takaful growth, unfavorably the family takaful. Thus, this
research is carried out to examine the significant factors influencing the choice of
family takaful among its participants. For that purpose, one takaful operator has been
sampled out. The findings relate to three contributing factors to the demand of family
takaful products; benefits, product features and quality services. Based on the
findings, takaful operator should focus in improving the takaful agents’ knowledge.
Key words: Consolidation Analysis; Settlement; Silt Content, GIS.
Cite this Article: Rafeah Saidon, Abdullah Ramly, Amal Hayati Ishak,
Mohd Zaki Razaly, Significant Factors Influencing the Choice of Family Takaful,
International Journal of Civil Engineering and Technology (IJCIET) 10(2), 2019, pp.
820–825.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=10&IType=2

2. Rafeah Saidon, Abdullah Ramly, Amal Hayati Ishak, Mohd Zaki Razaly
http://www.iaeme.com/IJCIET/index.asp 821 editor@iaeme.com
1. INTRODUCTION
The takaful industry has been blessed with remarkable growth and performance. As reported
in the Global Takaful Report 2017, there are more than 100 takaful operators in the Gulf
Cooperative Countries (GCC), Indonesia and Malaysia. The largest market in the world is
Saudi Arabia as 100% of their insurance industry is shariah-compliant, with 34 operators.
Meanwhile, the total global takaful contributions were estimated at USD14.9 billion in 2015,
calculated at a 14% growth rate. A more detailed analysis showed a constant growth of 14%
for the overall takaful industry involving the general and family takaful. The general takaful
industry recorded the largest market share at 83% with estimated USD12.3 billion revenues at
a 17% growth rate. Meanwhile the family takaful industry, only contributed 17% market share
with an estimated revenues at USD2.6 billion, at a -1%growth rate. The unfavorable growth
rate contributed to the slight decrease in the overall growth of the takaful industry. Looking
into the overall potential of takaful industry, the significant imbalance between general takaful
and family takaful performances need further scrutiny.
In Malaysia, the imbalance growth between family takaful and general takaful can be
recorded since 2012. The family takaful growth had dramatically dropped in 2013 to only 3%
from 29% in 2012. The growth continued with a slight decrease to 2% in 2014. However, in
2015, the growth increases to 4%. On the other hand, the general takaful business had shown
a consistent trivial growth since 2012 until 2014 (Farzana, 2017). In addition, the family
takaful business in Malaysia has been declining in terms of new business sales, from 44% in
2012 to 32% in 2015 due to higher capital requirements. Moreover, family takaful
determinants has been less researched as compared to determinants of life insurance
(Mohamed & Nor Azlina, 2013).
Analysing the unfavorable growth in family takaful business, this research delved into the
rationale behind it. This study empirically examines the significant factors contributing to the
selection to participate in family takaful. For that purpose, this study specifically analyses the
relationship between the demand for family takaful with three variables; the benefits, product
features and service quality. A total number of 80 questionnaires were administered among
the customers of a takaful operator, headquartered in Kuala Lumpur. The questionnaires
applied a five-point Likert scale to examine the tendency of selecting family takaful products
towards three selected variables; the products‟ benefit, features and quality of services. The
respondents were customers of family takaful offered by one of the Malaysian licensed
takaful operator established in 2005.
2. UNDERSTANDING THE TAKAFUL INDUSTRY
Looking into the equal exposure towards risks and catastrophes, protection is a necessity in
life. Such protection is known to be fulfilled by insurance. Recognizing the importance of
insurance, takaful or Islamic insurance emerges as an alternative for the Muslims. This is due
to the fact that Muslim jurists supports the concept of protection from unexpected loss but
condemn the elements of uncertainty, gambling and interest prevalent in the contract of
insurance.
The system of takaful is actually innate in the practice of the pagan Arabs prior to the
advent of Islam. Nevertheless, the practice had not been objected by the Prophet as the
benefits are undeniable. Thus, the system of takaful which includes the system of „aqilah
(mutual guarantee among tribes) and diyat (blood money to the heirs of victim) was approved
by Prophet Muhammad (Sheila, Mustapha, Wan & Syed; 2015 & Mohd, Wan & Abdul,
2015). Even though the takaful system rooted long ago in Islamic civilization, it only came
into existence in modern banking system, in the late 1970s. In 1979, Sudan was reported to
initiate the first takaful institution. Later on, takaful companies was established in other parts

3. Significant Factors Influencing the Choice of Family Takaful
http://www.iaeme.com/IJCIET/index.asp 822 editor@iaeme.com
of the world including Asia, the GCC as well European countries such as London, France and
Spain (Farzana et al., 2017). With the spirit of cooperation, protection, assurance and
assistance, takaful has been accepted globally.
The takaful system basically is a mutual guarantee agreement between participants (the
takaful policy holders) and the takaful operator. The participants agree to contribute a certain
amount of contribution, which will be divided into two parts; Participant‟s Fund (PF) and
Participants‟ Risk Fund (PRF). Both funds are to be managed by the takaful operator. The
participants mutually guarantee each other against defined loss through their contribution in
the PRF. Meanwhile, the PF remains their right after they surrender the policy, plus any
surplus from investment activities (Guidelines on Takaful, 2013). Through the PRF,
participants fulfil their responsibility to mutually help and guarantee each other from certain
defined loss.
In Malaysia, takaful came into existence in the 1980s, as a complementary the Islamic
banking and finance industry (Farzana etal., 2017; Asmak et al, 2008). Since then, various
products has been introduced in the two main business divisions; general takaful and business
takaful. The first refers to short term protection, normally within 12 months and renewable
policy after the term expires. Meanwhile, the latter refers to long-term protection and savings
either upon maturity or after five-years contribution at minimum, depending on the policy
statements (Guidelines on Takaful, 2013; Archer, Rifaat & Nienhaus; n.d).
2. FACTORS INFLUENCING TAKAFUL PRODUCTS SELECTION
The literatures enlisted several factors influencing the demand of takaful products. A study by
Razak et.al. (2013) highlights on the influence of perception, product features, promotion,
benefits and service quality towards the acceptance of takaful. Their results indicated service
quality as the most significant factor. Another study by Rahim and Amin, (2011) discovered
the influence of attitude, subjective norms and takaful information to the demand of takaful
product. In terms of the agents‟ impact, Hamid, and Rahman, (2011) found a good
relationship between agents‟ commitment, motivation and attitudes with the performance of
takaful industry.
Similarly, the three variables related to agents are consistently influential to the
performance of insurance market. On top of that, the choice of takaful product in Malaysia is
highly influenced by the rationale of choosing certain products over another. This is due to the
Malaysian takaful industry has various takaful models and method of surplus distribution.
Another research by Abdul Hamid et.al (2010) proposed that performance of the takaful
agents for human capital development should be improved as there are lack of enthusiastic
agents to act as representatives, for human capital development in takaful.
Interestingly, Juliana et al. (2013) proposes a comprehensive conceptual model by
identifying the main determinants that drive family takaful demand in Malaysia. There are
several critical f determinants of family takaful demand, namely, agency system or wakalah,
reputation of takaful operators, products and services, marketing and advertising of takaful
product. By using time series data over the period 1985-2007, Hendon, et al., (2009) found
that income per capita is a strong predictor of family takaful demand, while long-term interest
rate and composite stock index have significant relationship with family takaful demand.
However, other factors such as inflation and saving rates reported insignificant influence
towards family takaful purchase.
Meanwhile, Mohamed and Nor Azlina (2013) demonstrate that income, Islamic banking
development, education, dependency ratio and Muslim population are positively related to
takaful demand. On the other hand, inflation, real interest rate, financial development and life
expectancy appear to be the significant factors that adversely influence the total family takaful

4. Rafeah Saidon, Abdullah Ramly, Amal Hayati Ishak, Mohd Zaki Razaly
http://www.iaeme.com/IJCIET/index.asp 823 editor@iaeme.com
consumption. Additionally, Zuriah et al. (2009), stress the importance role of goods, money
and securities markets in promoting family takaful in Malaysia. The finding indicates that the
goods market is the most significant market in promoting family takaful in Malaysia.
3. ANALYSIS AND DISCUSSION
Table 1 shows the minimum, maximum, mean and standard deviation for the first
independent variable, i.e., the product‟s benefits. Based on the results, the highest mean over
4.0 refers to the element of savings, monetary protection after risk occurrence and less
worrisome to hospitalization costs. Interestingly, the respondents were not much influenced
by the returns from investment. This is related to the large portion of protection as compared
to investment. For instance, there are family takaful products which divide takaful
contribution in the ratio of 30:70 for investment and protection (Waheed, 2010). Therefore,
there will be not much returns from investment especially during the early years of
contribution. Nevertheless, moving towards the maturity, the returns increased trivially
(Guidelines on Takaful, 2013).
Table 1: Family Takaful benefits
Summary of Psychometric properties Mean Std Deviation
Monetary benefit 4.58 .552
Savings function 4.59 .550
Forfeit without charges 4.10 .759
Hospitalization without worries 4.28 .659
Good returns from investment 3.70 .800
Advantage of Tax exemption 4.23 .778
Table 2 shows the mean values for product features. The highest option is education plan,
followed by medical coverage. The interest in education plan is not surprising as it is parallel
with the findings of Wan, Norizan, Nor and Puspa (2012). Interestingly, the pilgrimage (hajj)
savings policy are also targeted by the respondents. Apart from that, respondents were also
attracted to the high returns from the investment policies. Theoretically, risks and returns are
known for their positive correlation (Nik, 2005). Thus, takaful puts forward the advantage of
yielding returns with protection from unexpected risks. Nevertheless, surprisingly,
respondents were not much attracted to the continual financial support. This finding is
rationalize by the fact that takaful compensation is not much as compared to insurance, due to
the underlying conceptual and operational differences (Mohd, Wan & Abdul, 2015; Mher &
Ahmad, 2011).
Table 2: Family Takaful Features
Summary of Psychometric properties Mean Std Deviation
Education plan plus protection and savings 4.30 .684
Investment link policy 3.93 .683
Saving for Hajj 3.94 .735
Medical expenses coverage 4.23 .659
Contribution post unexpected risks 3.75 .670
Continuation of financial support for the family 3.41 .623
Most of the respondents agree with the quality of service which attract their participation
in takaful. The results is depicted in Table 3. All items yield means above 4.00, reflecting the
selection of family takaful due to satisfaction, efficiency, friendliness, precision and
competence of the takaful operator. Neverthless, only item detailed information produces the
less mean. The findings is supported by Marhanum, Nurdianawati and Siti (2013), as their

5. Significant Factors Influencing the Choice of Family Takaful
http://www.iaeme.com/IJCIET/index.asp 824 editor@iaeme.com
research discover that takaful agents‟ knowledge is discontented. Thus, takaful operators
should emphasize on learning culture and environment in their respective organisations.
Table 3: Family Takaful Quality of Services
Summary of Psychometric properties Mean Std Deviation
Satisfaction towards the takaful operator 4.49 .582
Efficiency 4.38 .570
Friendliness 4.56 .554
Detailed information 3.97 .696
Precise answers 4.00 .737
Competence of the staff 4.20 .668
4. CONCLUSIONS
Based on the analysis, the demand of family takaful is highly dependent on three factors;
product benefit, features and service quality. Nevertheless, there are a few significant findings
in this study. First is the less tendency to select family takaful due to financial support to the
family. Although the finding may be explained by the smaller compensation of takaful as
compared to insurance, the factor can be further empirically researched. Secondly, the ability
of the takaful agents to provide detailed information to customers. Acknowledging the
increased literacy and education level of the customers, the agents should be equipped with at
least, the general knowledge of takaful along with other skills, to build up the customers‟
confidence and subsequently increasing the growth of takaful business.
ACKNOWLEDGEMENT
The authors would like to express gratitude to the Institute of Quality and Knowledge
Advancement (InQKA), Universiti Teknologi MARA (UiTM) for making available its
publication fund.
REFERENCES
[1] Abdul Hamid, M., Yaa‟kub, N. I., & Ab. Rahman, N. M. (2010). Operational Issues and
Shariah Harmonisation
[2] Towards the Development of Corporate Takaful Business: Conventional Debt Financing
and Reinsurance Mechanism. Jurnal Muamalat, 3, 139-155.
[3] Archer, S., Rifaat Ahmed Abdel Karim, Nienhaues, V. (n.d). Takaful Islamic Insurance
Concepts and Regulatory Issues, Singapore: Wiley.
[4] Asmak Ab Rahman et al., (2008). Sistem Takaful di Malaysia: Isu-isu Kontemporari.
Kuala Lumpur: Penerbit UM.
[5] Farzana Ismail et al. (2017). Global Takaful Report 2017 Market Trends in Family and
General Takaful. Milliman Research Report retrieved at www.milliman.com on August 5,
2018.
[6] Guidelines on Takaful Operational Framework. (2013). Kuala Lumpur: Bank Negara
Malaysia.
[7] Hendon R., Zuriah, A, R, Sharifah Sakinah, S.H. A. (2009), Economic Determinants of
Family Takaful Consumption: Evidence From Malaysia, International Review of Business
Papers, Vol. 5, No. 5, pp. 193-211.
[8] Juliana, A., Ahmad Shukri, S., Zunaidah, S. (2013). A Conceptual Model of Literature
Review for Family Takaful (Islamic Life Insurance) Demand in Malaysia, International
Business Research, 6 (3), 2013, 210-216.

6. Rafeah Saidon, Abdullah Ramly, Amal Hayati Ishak, Mohd Zaki Razaly
http://www.iaeme.com/IJCIET/index.asp 825 editor@iaeme.com
[9] Marhanum Che Mohd Salleh, Nurdianawati Irwani Abdullah & Siti Salwani Razali.
(2013). Measuring takaful agents‟ understanding towards the objectives and concepts of
takaful, Journal of Islamic Finance, Vol. 2, No. 1, pp.20-30.
[10] Mher Mushtaq Hussain & Ahmad Tisman. (2011). Conceptual and operational differences
between general takaful and conventional insurance. Australian Journal of Business and
Management Research, Vol. 1, No. 8, pp. 23-28.
[11] Mohamed Sherif & Nor Azlina Shaairi (2013). Determinants of demand on family
Takaful in Malaysia. Journal of Islamic Accounting and Business Research, Vol. 4 No. 1,
2013 pp. 26-50.
[12] Mohamed, S., and Nor Azlina, S. (2013). “Determinants of Demand on Family Takaful in
Malaysia”, Journal of Islamic Accounting and Business Research, Vol. 4, No. 1, pp. 26-
50.
[13] Mohd Fadzli Yusof, Wan Zamri Wan Ismail & Abdul Khudus Mohd Naaim. (2015).
Takaful: Operations and Business Competence. Kuala Lumpur: IBFIM.
[14] Nik Muhammad Naziman. (2005). Investment Theory and Practice. Shah Alam: UPENA.
[15] Rahim, F., & Amin, H. (2011). Determinants of Islamic Insurance Acceptance: An
Empirical Analysis. International
[16] Journal of Business and Society, 12 (2), 37 - 54.
[17] Razak, M. I. M., Yusof, R. I. M. M., & Ali, W. E. J. M. (2013). Acceptance Determinants
towards Takaful Products
[18] in Malaysia. International Journal of Humanities and Social Science, 243-252.
[19] Sheila Nu NuHtay, Mustapha Hamat, Wan Zamri Wan Ismail & Syed Ahmed Salman.
(2015). Takaful (Islamic Insurance): Historical, Sharia‟ah and Operational Perspectives.
International Business Management, Vol. 9, No. 1, pp 65-69.
[20] Sheila, N.N. H., Hanna Rabitah, Z. (2011), “Critical Analysis on the Choice of Takaful
Operating Models in Malaysia” In Global Economics, Finance and management
Conference, 9-10 June 2011, Toronto, Canada, http://irep.iium.edu.my/2280/
[21] Waheed Akhter. (2010). Takaful Models and Global Practices. Munich: Munich Personal
RePEc Archive retrieved at http://mpra.ub.uni-muenchen on November 17, 2017.
[22] Wan Muhamad Amir W Ahmad, Norizan Mohamed, Nor Azlida Aleng & Puspa Liza
Ghazali. (2012). A case study of acceptance model: A new integration model of education
plan takaful, International Journal of Advances in Engineering, Science and Technology,
Vol. 1, No. 2, pp. 169-179.
[23] Zuriah, A. R., Rosylin, M. Y. and A. Shabri, A M. (2009). The Role of Goods, Money and
Securities Market in Promoting Family Takaful in Malaysia, International Journal of
Monetary Economics and Finance, Vol. 2, no. 3-4.