April 29, 2016
Want the best deal for insurance coverage? We compare Takaful and conventional insurance to help you decide which is best for your needs. Here is a complete guide on Takaful insurance so you can broaden your insurance options.
Takaful is Shariah compliant insurance option which is grounded in Islamic Muamalat (Islamic transactions) products. This means under Takaful there can be various Shariah compliant products such as medical Takaful, motor Takaful and more. The term also refers to the concept of Islamic insurance based on mutual cooperation where both risks and funds are shared. Mutual financial aid is provided through the Takaful pool known as Tabarru’ (funds) which are collectively contributed from a group of people who choose to be covered under Takaful.
The first Takaful company in Malaysia was established in 1985 following the enactment of the Takaful Act 1984. Malaysian Takaful Association (MTA) is the body of reference for all Takaful related matters in Malaysia and the Takaful industry in Malaysia is also regulated through the Islamic Financial Services 2013 act.
Features of Takaful
Types of coverage under Takaful
There are two types of Takaful which is family Takaful and general Takaful and then there are various products under both Takaful.
Products under family Takaful are:
Products under general Takaful:
Takaful is only for Muslims
Takaful is open to everyone, and one does not have to be Muslim to take on Takaful coverage or to be a Takaful agent. Lack of awareness may be the reason behind why people think Takaful is only meant for Muslims when in fact Takaful is broad and borderless. So people need to know that they are other types of coverage they can explore aside from conventional insurance coverage.
Takaful is fundamentally different from conventional insurance
The idea of Takaful is similar to conventional insurance and shares the same fundamental roots. Both Takaful and conventional insurance aim to provide individuals as well as corporate bodies from loss and hazards. There is a common objective of both Takaful and conventional insurance which is an aim to reduce financial burden that arises in the event of disasters or loss.
Before you sign on the dotted lines for a Takaful insurance coverage, check if your agent is registered as a Takaful agent with MTA. This is to ensure you don’t get cheated by unscrupulous individual posing as a Takaful agent. Do take note that all Takaful agents are required to register with MTA before they are authorised to promote and distribute Takaful products. All registered Takaful agents will be issued with an authorization card. You can verify an agent’s registration status with MTA through the agent search section on MTA’s website. You can also have a look at the full list of licensed Takaful operators in Malaysia from Bank Negara Malaysia’s (BNM) website.
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