FATWA ABOUT TAKAFUL BY DFTL SHARIAH SUPERVISORY BORAD
Q) What is Takaful?
Takaful comes from the Arabic word “Kafala” or “Kafalat”, which means “guaranteeing each other” or joint guarantee. Hence Takaful is a tool to mitigate a loss which is provided by a fund created by the participating members who contributed and agreed to assist each other.
Q)What does it mean by “Contribution” ?
“Contribution” means the amount payable by a Participant to an Operator under a Takaful Contract"
Q) What do you mean by “ Family Takaful” ?
“Family Takaful” means Takaful for the benefit of individuals, groups of individual and their families.
Q) What do you mean by “Participant Takaful Fund” ?
“Participant Takaful Fund” means a Family Takaful Operator a sub-fund of a statutory fund into which the participant’s risk related contributions are paid and from which risk related benefits are paid out.
Q) What does it mean by “ Participants’ Membership Documents” ?
“Participants’ Membership Documents” means the documents detailing the benefits and obligations of a Participant under a Takaful Contract.
Q) What do you mean by “Re-Takaful” ?
“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.
Q) What do you mean by “Wakala based contract” ?
“Wakala based contract” means a Takaful contract based on the principle of Wakala (agency).
Q) What is Group Family Takaful and for whom the group policies are meant ?
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.
Q) What is Takaful Operator ?
Takaful Operator is an organization 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.
Q) How does Takaful differ from Conventional Insurance ?
The key differences between Takaful and Conventional Insurance are :
| Issue |
Takaful |
Conventional Insurance |
| Organization Principle |
Mutual for Participants |
Profit for Shareholders
|
| Basis |
Co-operative risk sharing |
Risk transfer
|
| Value Proposition |
Affordability and spiritual satisfaction |
Profits maximization
|
| Laws |
Shariah plus Regulations |
Secular/Regulations
|
| Ownership |
Participants |
Shareholders |
| Management status |
Operator: act as a ‘Wakeel’ (Agent) and ‘Ameen’(Trustee) |
Company Management: act as a ‘Guarantor’ and ‘Owner’
|
| Form of Contract |
Cooperative, Islamic contracts of ‘Wakala’(Agency) or ‘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
|
| Surplus |
Participants’ account |
Shareholders’ account
|
| 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
|
Q) What do you mean by Contribution /Tabarru ?
The contribution for participation is paid as ‘Tabarru’ (or donation) to the Takaful Fund. The ‘Tabarru' concept is fundamental to Takaful system eliminating it from uncertainty and gambling elements which are inherent in insurance contracts .Each Participant donates into Takaful Fund with the intention of assisting other Participants faced with difficulties, and not as premium payment to the company, as done in insurance contracts.
Q) What is Wakala Fee ?
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 manage Takaful Fund.
Q) What do you mean by Participant ?
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.
Q) What do you mean by the person covered ?
The person covered is the employee/member of the Participant who is included in the group coverage.
Q) Who can participate ?
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.)
Q) What are the details required from a Participant ?
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.