Takaful and insurance are very important as they perform the essential function of providing a financial safety net in the event something unexpected happens to you, such as developing a critical illness, getting into an accident, incurring loss of property, or even death.
To put it generally, Takaful is like an Islamic insurance. However, Takaful is fundamentally different from insurance in its principles and how it operates. Takaful is also not just for Muslims. It is also open to non-Muslims who prefer to subscribe to and receive Takaful benefits.
So how are they different?
At its most basic, insurance is an agreement between the insured (you) and the insurer (the company who bears the risk). This agreement is known as a policy, and in order to be insured, a fee, also known as a premium, is paid by you to the insurer.
These premiums are invested by the insurance company. You do not have a say where these investments are made and can include non-shariah compliant businesses including those with elements of gambling, interest and high risk/uncertainties.
Mutual assistance in Takaful
Similar to insurance, Takaful operators will also invest your contributions, however, only Shariah-compliant businesses qualify. This provides you with peace of mind if you want to ensure your Takaful subscription is Shariah-compliant.
Much like conventional insurance, there are many different types of Takaful plans covering life protection/family Takaful, medical, education and investment, among others. In a Takaful scheme, what you have is an arrangement based on the concept of Ta`awun (co-operation and mutual assistance). This means participants or certificate holders of a respective Takaful plan will not only protect themselves individually during times of misfortune, but also provide mutual assistance to all eligible Takaful participants as well as their nominees.
At PruBSN, Tabarru` funds are mutually and collectively owned by all Takaful participants. Therefore, when contributions made to a Tabarru` exceeds the amount of payable claims and reserves for a particular financial year, these excess of funds will be equally shared among participants and PruBSN. We call this surplus sharing. This means you don’t have to wait until the end of your Takaful coverage period to receive any surplus contributions, and you will still partake in the sharing even if claims have been made.
Nomination through conditional Hibah in Takaful
Literally meaning a gift or legacy, Hibah allows a Takaful participant to nominate a person (or persons) who will receive a Hibah upon your passing if you do not want your Takaful benefits to be distributed as part of your estate along with your other assets. This is a unique feature that fits well in legacy-type products and is a highlight of our PruBSN WarisanPlus plans. Plan your legacy by leaving your benefits to your loved ones by selecting conditional Hibah as a method of nomination. This will provide for and protect your family and loved ones even when you are no longer able to. By naming your loved ones as beneficiaries (under conditional Hibah), they will receive your death benefits without having to go through lengthy inheritance procedures.
Takaful, you need one!
Ultimately, Takaful provides you with a financial safety net in the event of unforeseen circumstances. If you do not have either in place, we strongly recommend you subscribe to a Takaful plan. Be it a debilitating illness, or a disability or death due to an accident, Takaful can ensure you and your loved ones receive necessary compensation and care.