About Takaful

Everything you need to know about Takaful.

"Takaful” means an arrangement based on mutual assistance under which takaful participants agree to contribute to a common fund providing for mutual financial benefits payable to the takaful participants or their beneficiaries on the occurrence of pre-agreed events.

Takaful is an Islamic insurance concept which adheres to ethics and transparency of Shariah guidelines that prohibit uncertainty (Gharar), gambling (Maisir) and interest (Riba). The word Takaful is derived from the Arabic verb Kafala, which means to guarantee, to help or to take care of one's needs.

Each covered participant contributes on the basis of Tabarru’ (donation) into a fund that will be used to support each other in times of need.

From protection to savings, we hold in our portfolio a variety of innovative products that cover you in every aspect with more added values, for the present and future.

Takaful is a mutual guarantee provided by a group of people against a defined risk or catastrophe befalling one’s life (life protection in the event of death, disability or illnesses), property or any form of valuable things.

It depends on your financial needs and affordability. The aim is to reduce your family's and your financial burden if an unfortunate event happens to you. You may use our Need Analysis to gauge the coverage you need based on your affordability.

Participating in a family takaful plan is a long-term commitment. It is important that you make a point to assess what you need and what you can afford. The factors you want to consider include the following:

Your Needs 
Your selection for a term plan must be a result of your own needs analysis. You should prepare a statement of all assets and liabilities, future goals, etc. and then zoom in on a sum that you would like to be covered for.

Your Risks or Obligations 
While all family takaful plans cover death, some plans cover more specific risks, for example the early onset of a critical illness, accidental death and partial disability. Liabilities like debts and financing need to be paid over some period of time. Ideally, the term of your certificate should incorporate this time frame. For example, if your home financing will require 15 years to be settled, then the term should continue at least 15 years.

Your Dependents and Commitments 
If your dependents have a few years before being financially independent, that duration can be the duration of your term. Landmark events like a wedding or a settled career should be appropriately within the term duration so as to allow your family to manage the financial uncertainties.

Your Financial Goals 
They can be as specific as legacy provision for your children or paying off your mortgage. These goals should have exact time frames.

Your Desired Protection Level 
This is generally based on numerous factors, some of which are:

  • how many dependents you have (e.g. retired parents, spouse, kids)
  • your outstanding long-term financial obligations (e.g. home financing, education fund)
  • your current lifestyle / standard of living
  • your current savings and investment assets
  • projected cost of expenses in the future based on currency valuation and inflation (e.g. an education degree at a private university today can cost 50% more years down the road)

Your Budget or Affordability 
This is the amount that you can set aside for family Takaful after deduction of expenditures, commitments and savings. A term Takaful plan, which covers a particular number of years, such as our Lindungi Plan is a relatively cheaper alternative for individuals who are just starting out in life or on a tight budget. While you may also wish to maintain your loved ones’ current lifestyle, you do not need to target to provide this if you find that the contributions are beyond your budget. If you are unable to continue with paying the contributions on time, your Takaful certificate may lapse or be terminated.

Understand the Product Well 
Ensure that you read and understand all the product-related documents such as Product Illustration and Product Disclosure Sheet before committing to participate in a family Takaful plan.

Disclose Required Information 
Takaful operators have put in place an underwriting process to determine what sort of risk you are to the Takaful company and for the company to decide whether or not to accept the risk. The risk of death or a critical illness is determined by several factors such as age, gender, lifestyle, personal and medical history, profession etc.

Shariah: Islamic law, includes obligations, duties, and moral considerations both legal and moral dimensions.

Riba: Interest, usury, prohibition is meant to distinguish an unlawful exchange (in which, there is a clear advantage to one of the contracting parties) from a lawful, mutually beneficial exchange and a lawful loan. Excess or literally, increase/addition - not exactly 'interest' but close.

Maisir: Gains from games of chance, unearned profit.

Gharar: Uncertainty in a contract of exchange as to the existence, deliverability, quantity or quality of the subject matter. Deception, hazard, speculation, etc.

Tabarru: A portion of participant's contribution for the purpose of mutual help and used to pay claims submitted by eligible claimants.

Wakalah Bil Ajr: An arrangement appointing us to manage the overall services provided under your Certificate. We will take a portion of your contribution as Wakalah Charges in return of our services.


Shariah Advisory Council Bank Negara Malaysia

Shariah reference center for Islamic finance.

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