sharia insurance

Get to know Takaful, Sharia Insurance that Protects Each Other

What is sharia insurance? In this article, we will discuss in full the definition of sharia insurance, its basics, and its principles. See the explanation in the following article.

Understanding Sharia Insurance

Sharia insurance or also known as Takaful is a type of insurance where members contribute money to a pool of funds to guarantee each other against loss or damage.

Takaful is based on sharia or Islamic religious law, which explains how individuals are responsible for cooperating and protecting each other. Sharia insurance policies cover health, life, and general insurance needs.

Islamic insurance companies were introduced as an alternative to the commercial insurance industry. As is known, conventional insurance is considered contrary to the principles that are forbidden by Islamic law such as usury, al-maisir, and al-gharar.

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All human activities have a risk of loss due to unforeseen events. Insurance exists to lighten this burden for individuals. The history of insurance dates back to at least 215 BC.

This concept has been practiced in various forms for more than 1400 years. Takaful comes from the Arabic word Kafalah, which means “mutual guarantee” or “mutual guarantee”. The concept is in line with the principle of compensation and shared responsibility among the community.

Takaful originated in ancient Arabian tribes as a common obligation that obliges those who offend members of different tribes to pay compensation to their victims or heirs.

This principle then extends to many walks of life, including maritime trade, where participants make financial contributions to cover anyone in the group who has an accident on a sea voyage.

Takaful is usually referred to as sharia insurance. This is because of the similarity between the kafalah contract (guarantee) and the insurance contract. However, Takaful is based on the principle of cooperation and the principle of separation between funds and shareholder operations, thus transferring ownership of funds and operations of Takaful (Insurance) to the policyholder.

Muslim jurists conclude that insurance in Islam must be based on the principle of togetherness and cooperation, which includes elements of shared responsibility, mutual compensation, common interests and solidarity.

Sharia Insurance Principles

Sharia insurance requires each participant to contribute in funds that are used to support one another. Each participant contributes an amount sufficient to cover the expected claims.

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The principles underlying Takaful can be summarized as follows:

  • Policyholders cooperate among themselves for the common good.
  • Each policyholder pays a portion of the dues as a donation to help those in need.
  • Losses are divided and liabilities are divided according to the community collection system.
  • Uncertainty is eliminated with respect to subscriptions and compensation.
  • This system does not seek to gain profit at the expense of others.

Theoretically, Islamic insurance is considered a cooperative insurance, where the members contribute a certain amount of money to a general pool. The purpose of this system is not profit but to uphold the principle of “bearing one another’s burdens.”

Thus the information about sharia insurance that we can provide. Thank you for reading this article and see you in another article.

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