Nobody downloaded yet

Islamic Insurance - Essay Example

Comments (1) Cite this document
This essay describes islamic insurance contracts also known as takaful contracts. Although insurance policies help in risk management, this approach of risk management has been widely criticized by Islamic scholars because it violates the Islamic “shariah” law…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Islamic Insurance
Read TextPreview

Extract of sample "Islamic Insurance"

Download file to see previous pages When the insured event doesn’t occur the insured person loses the sum invested in the policy and if the insurance claims are larger than the contributions then the insurance company is in deficit. The above three factors make conventional insurance “Haram- prohibited” in Islam. However, since safety and security is the basic human need in today’s uncertain world, therefore Muslim society needed an alternative to conventional insurance in order to secure their business transactions and personal interests. Islamic “shariah - code of conduct” is based on Muslim’s Holy book “Quran” and the sayings and traditions of the Prophet Mohammed, which preaches brotherhood and mutual interest in order to establish “just and equitable social order” in the society. Therefore, Takaful insurance was introduced to minimize the risk by mutual agreement which doesn’t exploit the interest of any party. C. TAKAFUL INSURANCE: “Takaful is an Arabic word, which means “joint guarantee” or “mutual co-operative agreement”. Tabarru is the basic pillar of Takaful insurance which means charity or gift”, (International Co-operative and Mutual Insurance Federation, 2005). Takaful insurance is based on the principles of Islamic brotherhood that promotes common interest and solidarity. Both parties share the responsibility with a sincere intention to help the other in his/her difficult time by paying the defined loss from the defined sum. D. CHARACTERISTICS OF TAKAFUL INSURANCE: 1. Both parties trust each other and contribute their money into a common pool. 2. The losses are divided so that the element of “gharar -uncertainty” is reduced and liabilities of each party under the losses are calculated...
This paper explaines why the conventional insurance in not permissible in Islam, defines takaful insurance and further explores the problem by determining the key features of takaful insurance and its differences and similarities with the conventional insurance.
“Takaful is an Arabic word, which means “joint guarantee” or “mutual co-operative agreement”.
Characteristics of takaful insurance are as follows:
1. Both parties trust each other and contribute their money into a common pool.
2. The losses are divided so that the element of “gharar -uncertainty” is reduced and liabilities of each party under the losses are calculated according to the Islamic pooling system.
3. The policy should not contain terms and conditions aiming towards getting the benefits at the cost of risking other party’s interest.
4. Both parties subscribe to help the other through guaranteed compensation so that uncertainty is removed.
5. The insurance funds are invested in instruments that are interest free.
The study concludes that the chances for the growth of the takaful business are very promising. Takaful products are available in many countries which meet the needs of the corporations and individuals. However, the biggest challenge is to overcome the shortage of resources especially, human resources, by providing training and development to employees about Islamic financial models and retaining competent employees who can contribute to the growth of takaful industry. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Islamic Insurance Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Retrieved from
(Islamic Insurance Essay Example | Topics and Well Written Essays - 2500 Words)
“Islamic Insurance Essay Example | Topics and Well Written Essays - 2500 Words”, n.d.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
auerdeonte added comment 3 months ago
Student rated this paper as
Brilliant paper! Used it to finish an assignment for a law course. It was easy as ABC, for the first time in my life.


Islamic Insurance Law

...?Contents 1Introduction: 4 1Motivation: 4 2Organisation of Dissertation: 5 2Literature Review 7 2.1Takaful 7 2 1Objections to Conventional Insurance system: 7 2.1.2Idea of Takaful: 9 2.1.3Basic Elements of Islamic Insurance: 10 2.1.4Models of Takaful: 11 2.1.5Areas of Takaful 17 2.1.6Islamic instance on Takaful: 21 2.1.7Takaful Products: 24 2.1.8Personal Accident Takaful 24 2.2Difference between Takaful and conventional insurance: 25 2.3Takaful and risk mitigation: 29 2.3.1Underwriting Risks: 29 2.3.2Operational Risks: 30 2.3.3Investment Risks: 30 2.3.4Strategic Risks: 31 2.3.5Compliance Risks: 31 2.4Takaful Misconceptions: 32 2.5Takaful and the modern World: 33...
63 Pages(15750 words)Dissertation


...? Insurance Insurance Introduction Health insurance helps in easing the burden and mitigating the risk of incurring expenses in seeking medical care among individuals. Prior to 1930, individuals seeking any assistance from physicians had to depend on their own pockets in paying the expenses. However, in 1930, American healthcare changed into a third party payer, which could either be private or public. The healthcare system of the United States relies immensely on the private health insurance. This comprises the principal source of coverage for most individuals in the U.S. Research depicts that around 58% of the Americans rely on private health insurance (Singh, 2009). Low income families, children and most senior citizens have... the...
6 Pages(1500 words)Essay


...? Insurance Module This paper discusses how different companies provide care along with the types of plans and expenses usually incurred. Furthermore, it gives a personal view of which plan is most suitable. Keywords: Care, plans Aetna Insurance Aetna insurance provides health insurances of different varieties which includes medical, dental, pharmacy, behavioural, group and disability plans (, 2013). These plan are customized according to the consumer needs and requirements and in most cases are pre-defined. Aetna insurance plans are usually designed considering health care management of its customers. Customers of Aetna Foundation comprise of...
4 Pages(1000 words)Assignment


...has many packages and they vary from companies to customers need. Car insurance is when an insurance company pays for your car repair in case of an accident. It seems like that the insurance companies are entities which are there to help people, but in the realty, this industry is making very high profits as they take your dollars as profits and gives you your money in cents. Insurance companies have established their grounds despite facing many problems. The major controversy about insurance companies is coming from the religious segment of the society as all the three main religions Christianity, Islam and Judaism are against...
5 Pages(1250 words)Essay


...Insurance Introduction The Law Commission of England and Wales and the Scottish Law Commission in June 2007, presented a Joint discussion Paper on ‘Insurance Contract Law which was disputed on the basis of falsification, Non-revelation and violation of Warranty by the Insured’. In this Joint Consultation Paper 2007, the important focus was a potential law reform on misrepresentation and non- revelation at pre-contractual phase with the assured and mediators and as well violation of insurance warranties. Response to the proposals of the concerned parties have been called for and further step was to expand the consultation procedure to other difficult areas of...
8 Pages(2000 words)Essay


...Running head: Insurance Insurance Insert Insert Grade Insert 28 October Insurance has been in existence for a long period; however, today, it has become more prevalent, as the insurable items keep on expanding. This paper discusses critically the concept of insurance, including its benefits and various types of insurance that exist. It emphasizes on the importance of insurance not only as a cushion in times of uncertainties, but also as a form of investment. Insurance Introduction Insurance is a practice that involves a company guaranteeing compensation for a specific loss such as, illness, damage, or even death; in return, the client is supposed to make certain payments. Economics defines insurance as a form of risk management... , which is...
5 Pages(1250 words)Term Paper

Why life insurance is or is not appropriate in Islamic countries

...Life Insurance In Islamic Countries Introduction Safety is important which everyone avails by different ways. Man loves his belongings and cares a lot for his life. According to Holy Quran: O ye you love money. Mans worry for his life encourages him to avoid peril he meets by different means. If these difficulties trap him, they will make trouble him and cost immense uncertainties Life Insurance is a tool people have been using right from the beginning to deal with the losses such as natural disasters etc. Insurance covers almost all types of risks (RIMS, 2012). Insurance has become a part of life. With large companies offering range of products to cover...
5 Pages(1250 words)Research Paper


...Application of Telematics System in Motor Insurance Introduction: Telematics insurance system is an innovative concept that encompasses a wide rangeof applications “beyond the traditional insurance coverage” (Tindall, 2013). The system, which commands high popularity in developed countries such as the UK and US, has initially been based on a “pay-per-km (Pay-As-You-Drive or PAYD)” but has evolved in recent days to comprise the concept of “Pay-How-You-Drive (PHYD),” signifying that the insurance premium is calculated on the basis of “how” one drives the vehicle rather than “how far” one drives it (Tindall, 2013). The insurance schemes using telematics technology has several advantages while at the same time it ails from certain... ...
6 Pages(1500 words)Essay


...Islam Islam is the religious faith of Muslims. It is based on religious system and words which originated from Prophet Muhammad. Its basic principle is absolute submission to Allah. There are many misconceptions about this religion. Among them include Muslims are terrorists, violent, and extremists (Mussarat 11); Islam oppresses women; those who subscribe to the faith worship a God different from other religions; Islam are not tolerant of other faiths; all Muslims are Arabs; the Nation of Islam comprise of only Muslim group; All men in Islam marry four wives; Muslims are backward and barbaric people, and the founder of...
1 Pages(250 words)Assignment

Qatar Islamic Insurance Company

...Qatar Islamic Insurance Company Introduction The Qatar Islamic Insurance Company (QIIC) was founded in the year 1995 and ever since, it has been rapidly growing. It is one of the leading Takaful companies in Qatar. The company’s policy and principles adhere to Islamic Sharia. The company believes in dynamic work management and innovation, which has resulted in introduction of new products and services and continuous up-gradation of operations. Despite of tremendous local and regional competition, the company has achieved exceptional growth and revenue. The successful management structure of the company is reflected in its financial position and has...
5 Pages(1250 words)Research Proposal
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Islamic Insurance for FREE!

Contact Us