Dawood Family Takaful

The key differences between TAKAFUL and Conventional Insurance are :

Issue	Takaful	Conventional Insurance
Organization Principle	Risk-Sharing Cooperative Financial Protection among participants	Risk-Transfer mechanism between Insurer & Insured - resulting in one's gain & other's loss
Value Proposition	Affordability and spiritual satisfaction	Profits maximization
Laws	Shari'ah-Compliant Rules & Regulations	Conventional/Secular Ordinances Only
Ownership of Protection Fund	Waqf - with Participants as beneficiaries	Life Fund - Owned by Shareholders
Management status	Operator: act as a ‘Wakeel’ (Agent) and ‘Ameen’ (Trustee)	Company Management: act as a ‘Guarantor’ and ‘Owner’
Form of Contract for Protection Fund	Cooperative Waqf, Operated under Islamic contracts of ‘Wakala’ (Agency);‘Mudaraba’ (Profit-sharing) with payment of contribution as Tabar’ru (donation)	Contract of Sale with payment of Premium
Investments	Shariah compliant, Riba-free	Interest-based also permissible
Surplus	Shared among PTF Participants	Accounted as 'Underwiting Profit' for Shareholders
Religious Consensus	Considered as ‘Halal’ mode of risk mitigation by Shariah	Considered as ‘Haram’ mode of risk mitigation by Shariah
Regulated By	SECP & Shariah Advisors	SECP

The term "TAKAFUL" is derived from an Arabic word “Kafala” (to guarantee),while its literal meaning is “to guarantee each other” or mutual guarantee. Hence the mechanism of "TAKAFUL" is to create a pool, in which participants donate (tabarru) funds for risk-sharing of losses among the participating members of Takaful fund."

“Family TAKAFUL” means TAKAFUL for the benefit of individuals, groups of individual and their families.

In a family-Takaful company, the “Participant Takaful Fund (PTF)” is the Shari'ah Complaint alternative to a "Life Fund" of Life Insurance companies. For a Family Takaful Operator, PTF is a sub-fund of a statutory fund in which the participant’s risk related contributions are paid and from which risk-sharing benefits (sum covered & surplus) are paid out.

Takaful Operator is the organizational management, which manages TAKAFUL Fund and takes up the responsibility of determining contribution amount, collection of contributions and payments claims to eligible Participants. In this role the TAKAFUL Operator charges ‘Wakala’ fee for its services. TAKAFUL Operator also manages investments of a TAKAFUL Fund in which it shall also shares in the profits, if any, according to agreed proportion based on ‘Mudaraba’ principles.

A contributor to Takaful Fund participating in any protection scheme is referred as the Participant. In case of Group Family TAKAFUL, the Participant is the organization who takes TAKAFUL coverage for its members.

Qualifying criteria for participating in the Group Family TAKAFUL Plan is as follows :

Any group of individuals having 10 or more individuals
Minimum age of entry in the scheme is 18 years.
Maximum age of entry in the scheme is 59 years.
Expiry of coverage will be at the age of 60 years.

(If desired by Participant, the age limit can be relaxed up to 65 years subject to fulfillment of underwriting requirements.)

The person covered is the employee/member of the Participant who is included in the group coverage.

The participants are required to provide the following information about the individual to be covered :

Name of the individual
Date of Birth / Age
Date of appointment
Designation
Salary
Amount of Coverage
CNIC No.

Please provide us with the above information and we will arrange for a plan at our earliest. For more information, please call us at 111-DFT-786 (111-338-786) or visit 1701-A Saima Trade Tower, I.I. Chundrigar Road, Karachi, Pakistan.

“Contribution” means the amount payable by a Participant to Operator (management) under a TAKAFUL Contract. In the non-investment plans, the contribution amount is aimed for Participant Takaful Fund, minus any management expense"

The contribution-to-PTF by participants is paid as ‘Tabarru’ (or donation) to the TAKAFUL Fund. The ‘Tabarru' concept is fundamental to TAKAFUL system, which eliminates the forbidden elements of uncertainty and gambling, inherent in insurance contracts. Each Participant donates (gives Tabarru) into Participant Takaful Fund (PTF) with the intention of assisting other Participants faced with difficulties, and not as premium payment to the company, as done in insurance contracts.

“Re-TAKAFUL” means an arrangement for re-TAKAFUL of liabilities in respect of risks accepted by the Operator in the course of carrying on TAKAFUL business and include ceding risks from Participant TAKAFUL Funds to Re-TAKAFUL Operator.

The term ‘Wakala’ (Agency) is derived by from the word ‘Wakeel’ (Agent). It is the fee incurred by a TAKAFUL Operator from the Participants to manageTAKAFUL Fund.

“Wakala based contract” means a TAKAFUL contract based on the principle of Wakala (agency), in which the operator acts as an agent (wakeel) for the participant (Maw-kel - Principal party).

Group Family TAKAFUL is a collective arrangement for providing the benefits of coverage to a group of people. The importance of Group Family TAKAFUL lies in the fact that through this arrangement protection can be provided to a group of individuals on terms which are normally more beneficial than would have been possible for them in their individual capacity.

“Participants’ Membership Documents” means the documents detailing the benefits and obligations of a Participant under a TAKAFUL Contract.

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