Contents

1.0

Introduction.............................................................................................2

1.1 Objective of the Study............................................................................2

1.2 Methodology of the Study.......................................................................2
1.3 Limitations of the Study..........................................................................3
2.0 Conceptual and Structural Differences between Takaful and Conventional
Insurance.........................................................................................................5
2.1 Prohibitions of Gharar, Maisir and Riba................................................5
2.2 Principles of Takaful..............................................................................6
3.0 Fire Insurance............................................................................................8
3.1 Asia Pacific General Insurance Company Ltd.......................................8
3.2 Islami Insurance Bangladesh Ltd.........................................................9
4.0 Endowment Policies.................................................................................11
4.1 National Life Insurance Company Ltd................................................11
4.2 Prime Islami Life Insurance Ltd..........................................................12
4.2.2 Benefit of Plan....................................................................................13
5.0 Health Insurance......................................................................................14
5.1 Delta Life Insurance Company Ltd.....................................................14
5.1.8 Group Hospitalization Insurance Plans............................................15
5.2 Protective Islami Life Insurance Ltd...................................................18
6.0 Deposit Pension Scheme..........................................................................22
6.1 Sunlife Insurance Company Ltd.........................................................22
6.2 Fareast Islami Life Insurance Company Limited.................................23
7.0 Term Insurance........................................................................................24
7.1 Jiban Bima Corporation......................................................................24
7.2 Padma Islami Life Insurance Ltd........................................................25
8.0 Findings and Recommendations..............................................................28
8.1 Differences between Takaful and Conventional Insurance Products. .28
8.2 Challenges for Takaful Operators.......................................................29
8.3 Prospects for Takaful Business Operators..........................................30
0

9.0 Conclusion...............................................................................................32

1.0 Introduction
Insurance is a means of protection from financial loss. It is a form of risk management primarily used to
hedge against the risk of a contingent, uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, and insurance carrier. A
person or entity who buys insurance is known as an insured or policyholder. The insurance transaction
involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the
insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The
loss may or may not be financial, but it must be reducible to financial terms, and must involve something
in which the insured has an insurable interest established by ownership, possession, or preexisting
relationship. The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insured will be financially compensated. The amount of money charged by
the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the
insured experiences a loss which is potentially covered by the insurance policy, the insured submits a
claim to the insurer for processing by a claims adjuster. Billah, Mohd. Masum,(2001)
Takaful (Arabic: )is a co-operative system of reimbursement or repayment in case of loss, paid to
people and companies concerned about hazards, compensated out of a fund to which they agree to donate
small regular contributions managed on behalf by a Takaful operator. [1] It is defined as an Islamic
insurance concept which is grounded in Islamic muamalat (Islamic banking), observing the rules and
regulations of Islamic law. This concept has been practiced in various forms since 622 AD. [2] Muslim
jurists acknowledge that the basis of shared responsibility (in the system of aquila as practiced between
Muslims of Mecca and Medina) laid the foundation of mutual insurance. Mohamed Sherif, (2010)
This report is about a comparison between products and services offered by Takaful insurance and
conventional insurance in Bangladesh.

1.1 Objective of the Study

The objective of the report includes:
To review the distinctive concepts of Islamic insurance
Get an overview about the detailed features of Takaful and insurance products offered in
Bangladesh
Identify difference between the products
Identify how much the Takaful products features comply with the Islamic and regulatory rules
and regulations.

1.2 Methodology of the Study

This study has been prepared on the basis of experience gathered from theoretical knowledge. Only
secondary data have been collected to prepare this study. We have presented our experience and findings
in the various part of this study.
The data are collected from the given sources:
1) Company websites
2) Company Prospectus
3) Journals and books.

1.3 Limitations of the Study

From the beginning to end the study has been conducted with an intention of making it a complete one.
However many problems have appeared in conducting the study which are:
I. Lack of in depth knowledge about the concepts
II. Definite time period
III. Poor disclosure of information about the products of Islamic and conventional insurance companies
in Bangladesh

CHAPTER 2

2.0 Conceptual and Structural Differences between Takaful

and Conventional Insurance
Takaful operators and mainstream conventional insurers differ in terms of their essential conceptual
paradigms. Mainstream conventional insurance comprises an undertaking by an insurer in exchange for
consideration to make a payment to either the insured or another if a specified event occurs. Takaful is
Islamic alternative to conventional insurance and is based on the notion of social solidarity, cooperation
and joint indemnification of losses of the members.
Within risk management it can serve to hedge against the risk of a contingent loss and can replace the risk
of a large possible devastating loss with a small contingent loss. Aspects of mainstream insurance are
generally held to be structurally contrary to Islamic Shariah principles notably the following.

It is contrary to reliance on Allahs will by avoiding risk, because Muslims believe that what
happens is predetermined by His will. They are allowed however to take steps to minimize the
impact of events. What then is specifically objectionable in conventional mainstream insurance?

It is a commutative contract which unduly limits uncertainty and ambiguity. It entails Riba (prohibited
interest), Gharar (inordinate risk and insufficient transparency), Maisir (gambling), and investing in
prohibited activities such as alcoholic beverage production.

Conventional insurance is furthermore considered Haram (prohibited) because the insurers pay
for a loss of human life which is priceless and they aim to generate a profit for their stakeholders
not whom they are insuring.

Takaful is a contract of mutual guarantee based on mutual co-operation and gratuitous offering in which
risk is assumed voluntarily by participants in the Takaful pool/contract.

2.1 Prohibitions of Gharar, Maisir and Riba

Gharar: An insurance contract contains gharar because, when a claim is not made, one party
(insurance company) may acquire all the profits (premium) gained whereas the other party
(participant) may not obtain any profit whatsoever. Ibn Taimiyah, a leading Muslim scholar,
further reasoned "Gharar found in the contract exists because one party acquired profit while the
other party did not". The prohibition on gharar would require all investment gains and losses to
eventually be apportioned in order to avoid excessive uncertainty with respect to a return on the
policyholder's investment.
Maisir: Islamic scholars have stated that maysir (gambling) and gharar are inter-related. Where
there are elements of gharar, elements of maysir is usually present. Maysir exists in an insurance
contract when; the policy holder contributes a small amount of premium in the hope to gain a
larger sum; the policy holder loses the money paid for the premium when the event that has been
insured for does not occur; the company will be in deficit if the claims are higher than the amount
contributed by the policy holders.
Riba: Conventional endowment insurance policies promising a contractually-guaranteed
payment, hence offends the riba prohibition. The element of riba also exists in the profit of
investments used for the payment of policyholders claims by the conventional insurance

companies. This is because most of the insurance funds are invested by them in financial
instruments such as bonds and stacks which may contain elements of Riba.
Based on these differences it is of interest to examine whether there are differences in products offered
and their features between Takaful and standard insurance companies in Bangladesh.

The word insurance or banking when prefixed by Islamic means that all theories and practices are
examined from the perspective of Islamic laws and values as enshrined in the Quran (holy book) and
Hadith (sayings of prophet Muhammad, peace be upon him) (Farooq et al., 2010). The concepts of aldiyah and al-aqilah (blood money to rescue an accused in accidental killings) gave birth to the concepts of
Takaful. In Arabic, Takaful means joint guarantee, which can be further defined as an agreement among a
group of members or participants who are willing to mutually guarantee one another against potential
future losses to their respective assets (Rahman et al., 2008). The core of the Takaful concept is the aim to
promote mutual cooperation, solidarity and brotherhood in the community. Islam prohibits Riba, Gharar
and Maysir in either commercial or social contracts. Islamic scholars such as Ibn Abdin (1784-1836) first
started to examine whether conventional insurance is in accordance with the tenets of Islam (Anwar,
1994).

The differences between Takaful undertakings and those of conventional insurers are identified in the
Islamic Financial Services Board (IFSB) Guiding Principles:
Takaful undertakings are generally structured as hybrids between mutual and proprietary entities;
thus, they may face various conflicts of interest that ordinarily would not arise in conventional
insurance.
Takaful undertakings must adhere to the core principles of Ta`awun (cooperation) and Tabarru
(donation) and the prohibition of Riba and an inherent component that adds value and
differentiates between Takaful undertakings and those of conventional insurers is the sharing of
risks among the Takaful participants, rather than the transfer of risks from the participants to the
Takaful operator.
This becomes part of the rationale for the practice of creating a separate account for underwriting
activities on behalf of the Takaful participants, while the shareholders in Takaful operators will
not bear any responsibility in the event of a deficit or loss suffered by the Takaful fund, other than
having in place a Qard (voluntary loan) facility to enable the Participants Risk Fund (PRF) to
meet its obligations in the event of a deficiency. However, the capital of the Takaful operators is
exposed in extreme cases where the PRF suffers a loss on such a scale that the Qard once made
cannot be recovered from contributions over any reasonable period.

2.2 Principles of Takaful

Islamic insurance requires each participant to contribute into a fund that is used to support one another
with each participant contributing sufficient amounts to cover expected claims.
The underlying principles of Takaful may be summarized as follows:
6

Policyholders co-operate among themselves for their common good.

Every policyholder pays a part of the contribution as a donation to help those that need assistance.
Losses are divided and liabilities spread according to the community pooling system.
Uncertainty is eliminated in respect of subscription and compensation.
It does not seek to derive advantage at the cost of others.
It must operate according to Islamic co-operative principles.

Reinsurance commission may be paid to, or received from, only Islamic insurance and
reinsurance companies.

The insurance company must maintain two funds: a participants/policyholders' fund and a
shareholders' fund.

Theoretically, Takaful is perceived as cooperative insurance, where members contribute a certain sum of
money to a common pool. The purpose of this system is not profits but to uphold the principle of "bear ye
one another's burden." Rashid, Syed Khalid, (2006),

3.0 Fire Insurance

The transaction of Fire insurance business in Bangladesh is governed in accordance with Part II B of the
Insurance Act 1938. The subject matter of Fire insurance may be any property having intrinsic value; e.g.
building, furniture, fixture & fittings, plant and machinery, goods and merchandise.

3.1 Asia Pacific General Insurance Company Ltd.

Fire Insurance Business:
It primarily aims at providing protection against financial losses arising out of the operation of fire or
certain other specified perils. The subject matter of insurance are usually: (a) Building (b) Plant &
Machinery (C) Furniture, Fixture and fittings (d) Goods and Merchandise. (e) Stocks of all kinds

Direct risks covered under standard fire insurance policy:

Accidental fire, lightning & Explosion (Boilers or gas used for domestic purposes only). The perils
covered by the policy in its normal terms are:a) Fire: Whether resulting from explosion or otherwise.
b) Lightning: Whether fire results or not.
c) Explosion: Boiler used or gas used for domestic purpose only.
In addition to the above, this Policy also generally covers the following forms of damage:1. Damage during or immediately following a fire caused by (a) Smoke (b) Scorching (c) Falling
walls and the like.
2. Damage caused by a fire brigade or other competent authority in discharge of their duty including
a) Damage caused by water or other extinguishing agents employed.
b) Damage caused by the blowing up of buildings to prevent the spread of a configuration.
8

3. Damage to property while being removed from a building or immediately after its removal from
burning building caused by exposure to weather, provided the removal was justified.
Additional risks covered on payment of additional premium:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)

Riot and strike damage (RSD)

Explosion damage (including commercial purpose)
Malicious damage.
Earthquake
Spontaneous combustion.
Cyclone
Flood.
Busting or overflowing of tanks, pipes etc.
Subsidence
Land slide,
Articles dropping from aircraft
Subterranean fire
Sprinkler leakage

The policy does not cover:

War, Undergoing any process or heating, Spontaneous fermentation,

Sentiment Value, Radio Active Contamination or Ionizing radiation.

3.2 Islami Insurance Bangladesh Ltd.

Islami Insurance Bangladesh Limited (IIBL), the first General Insurance (Takaful) Company based on the
Islami Shariah was registered and established under the Bangladesh Company Act, 1994 and the
Bangladesh Insurance Act, 1938 on 29th December, 1999 to transact all sorts of general Takaful business.
The Company started functioning from 1st January, 2000.
The scope of Fire insurance may be considered under the following headings:
A. Standard Fire Policy
B. Special Perils Fire Policy

The Standard Fire Policy:

This is the basic policy issued and the form is prescribed by the Tariff .The Policy covers the following
perils:a) Fire including fire resulting from explosion. The term "Fire" is understood to mean actual ignition
under accidental circumstances. Mere scorching or heating or fermentation is not a loss by fire.
b) Lightning (whether fire ensues or not)
c) Explosion of Boiler used for domestic purpose only.
d) Explosion of Gas used for domestic purpose only or for lightning or heating in a building not
forming part of gas work. In addition, loss or damage caused by smoke, by water used for
extinguishing the Fire and by action taken by the Fire Brigade in putting out the fire is also covered.

Peril not covered:

Loss or damage due to any of the following incident may be covered by taking extra cover along with
Fire policy:a)
b)
c)
d)
e)
f)
g)
h)

Earthquake Fire & Earthquake Shock

Flood, Cyclone & Typhoon, Tornado.
War, Civil war & other kindred perils.
Riot & Strike damage.
Explosion except as mentioned above.
Burning of forest, bush and Jungles and the clearing of lands by fire:
Damage due to falling from Aircraft.
Malicious damage.

Losses not covered:

The under mentioned losses are excluded from the Standard Fire Policy:(a) Loss by theft during or after the occurrence of a fire
(b) Loss or damage to property occasioned by its own fermentation, natural heating or spontaneous
combustion or by its undergoing any heating or drying process.
(c) Loss or damage occasioned by or through or in consequence of the burning of property by order
of a public authority or subterranean fire
(d) Loss due to nuclear risks
(e) Loss of or damage to a particular electrical machine, apparatus, fixture etc. Due to fire arising
from short circuiting or other electrical risks unless extra cover for electrical damage is taken.

Property not covered:

The below mentioned property cannot be covered ordinarily under the Standard Fire Policy on account of
condition No.7, but they could be covered by making a specific reference:

10

a)
b)
c)
d)

Bullion or unset precious stones.

Any curiosity or work of art for an amount exceeding Tk.2500/Manuscripts, plans, molds etc.
Securities, stamp, coins or paper, money, cheques, account books, computer system, records
etc.
e) Explosives.
Special Perils Fire Policy:
To meet demands of varying needs of the insured special types of policies can be designed with certain
modifications of the basic indemnity provided under a Standard Fire Policy.
Industrial all Risk Policy:
The company also issues "Industrial All Risks" Policy in respect of big industries whose value exceeds
Tk. 50 Crore.

4.0 Endowment Policies

11

4.1 National Life Insurance Company Ltd.

Life insurance that promises to pay a stated amount to a designated beneficiary if the insured dies within a
stipulated time or to the insured himself if he survives refers to endowment insurance. Endowment
insurance is the most popular plan. It provides family protection as well as old age provision at an
affordable premium. This policy is suitable for all categories of people.
ENDOWMENT INSURANCE (WITH PROFITS)
4.1.1 Features & Eligibility
Types of plan:

It is an Endowment assurance plan

Minimum entry age:

18 years

Maximum entry age:

55 years

Minimum sum assured:

Tk. 30,000/=

Maximum sum assured:

Based
condition

Minimum maturity age:

28 years

Maximum maturity age:

70 years

Policy terms:

10, 15, 20, 25, 30 & 35 years

Mode of payment:

yearly, half-yearly

Income tax :

Income tax relief permissible

Premium calculation :

Premium
rate
(per thousand) given in the brochure.

Supplementary rider :

DIAB(Double
accidental
PDAB(
Permanent
FIR( Family income rider)

on

disability

socio-economic

chart

accident

indemnity
benefit)
benefits)

4.1.2Benefits:
Survival:
On survival of the policy holder up to maturity full sum assured with accrued bonus will be paid.
Death:
On death of the policy holder sum assured with accrued bonus up to that day will be paid.

12

4.2 Prime Islami Life Insurance Ltd

4.2.1 Gift Assurance plan (Endowment) -with profit
1. Type of the Plan
This plan is developed in combination of
endowment and accidental policy. In this plan title
of the policy goes to the hand of son/daughter of
the assured at the end of the term of policy.

2. Term of the Plan

12 to 30 years

3. Age of the son /daughter at the commencement

of the policy

Minimum 1 year Maximum 18 years

4. Age of the assured at commencement of policy

Minimum 20 and Maximum 48 years.

5. Minimum 20 and Maximum 48 years.

60 years

6.Age of the son/daughter at maturity

Minimum 18 and maximum 30 years

7. Mode of Payment

Quarterly / Half yearly / yearly

8. Calculation of premium for installment

Level premium

9. Prospective policyholder

Service holder, business man, professional, who are

keen to save for his son/daughters higher
education, marriage for a long term.

10. Nominee

Policyholder can take one policy in the name of

more than one son/ daughter.

4.2.2 Benefit of Plan

1. At maturity

The son/daughter will get the money deposited in mudaraba fund

along with accrued bonus.

2. In case of assureds death duringi) No further future premium will have to be paid.
policy term provided that the ii) At the completion of policy term, the nominee will get full sum
policy is in force.
assured and accrued bonus from the mudaraba fund (If any).
iii) If policyholder dies due to accident within the policy period and
the policy remains in force: - The nominee (s) will get the amount
13

equivalent to three times of sum assured.

5.0 Health Insurance

Health Insurance is now considered indispensable in developed countries. In the present financial-social
perspective of Bangladesh as well, Health Insurance has now become an essential, dependable, acceptable
and the most cost effective means to make the modern treatment facilities affordable to all socioeconomic classes of people, especially the fixed income group.

5.1 Delta Life Insurance Company Ltd.

5.1.1 Hospitalization (In-patient) treatment coverage plans

Hospitalization Insurance Plan (Group)- offered to Members of a group and their dependents (if
desired)
Hospitalization Insurance Plan (Individual) offered to an Individual as well as his or her
dependent family members also known as "Delta Care Hospitalization Plan".

5.1.2 Out-patient treatment coverage plans

Out-patient Insurance Plan - Offered as an adjunct to Group Hospitalization

Out-patient Management Plan - Offered as an adjunct to Group Hospitalization

5.1.3 Overseas treatment coverage plan for travelers

Overseas Medic Liam Policy (OMP) A pre-requisite for visa application offered only to
Individuals traveling abroad.

5.1.4 Hospitalization Insurance Plans

14

Covers in-patient (Hospitalization) treatment expenses of an insured member

5.1.5 Expenses Covered under Hospitalization Insurance Plans

Hospital Accommodation
Consultation Fee
Medicine & Accessories
Medical Investigations
Surgical Operation
Ancillary Services like Blood Transfusion, Ambulance Service, and Dressing etc.

5.1.6 General Features of the Scheme

No need for preliminary Medical Examination during enrolment.

Treatment coverage round the clock inclusive of Accidents and Emergencies.
Coverage offered to Bangladeshi National as well as resident foreigner.
Treatment at any renowned hospital or clinic by consultant of own choice.
Preferential service at Designated Hospital.
Direct payment of treatment expenses by the company at Designated Hospital.
Reimbursement of expenses for treatment at non-designated hospital.
Membership ID card for each insured to facilitate preferential services.
Option for Maternity Benefit and Overseas Treatment coverage.
Provision for inclusion of Spouse & Children under the plan.
Provision for inclusion of new member under the plan.
Coverage up to 65 years under Group HI & 60 years under Individual HI plan.
Two types of plans with several benefit grades to choose from.
Option to choose more than one grade according to status of the members of a group.
Option to alter benefit grade during renewal.

5.1.7 Exclusion from Coverage: Major Exclusions include

Congenital infirmity
Pre-existing condition for certain period
Psychiatric disorders and narcotic addiction
Attempted suicide and self-inflicted injury
Dental Treatment
Pre or post hospitalization expenses and outpatient treatment expenses
War risk, civil commotion or violence
Routine health checkup
Treatment for family planning purpose, contraception and infertility

5.1.8 Group Hospitalization Insurance Plans

Types of plan offered:
Standard Plan: Distinctive Hospitalization Insurance Plan of Delta Life
Customized Plan: Tailored to the need and desire of the client.
Standard Plan: Five Grades of benefits are offered under standard plan to choose from
15

Benefit Grade
Max Benefit for
Insured per year

Master
care
each Tk. 25,000

Super
care
Tk.
45,000

Deluxcare
Tk.
75,000

Exclusive
care
Tk. 100,000

Royal
care
Tk.
140,000

Benefit Schedule & Premium Rate

Benefit per Hospitalization
Benefit Grades

Master
Super
care
care
Max. Benefit (Each Insured Per Tk.
Tk.
Year)
25,000
45,000
Hospital Stay (Maximum days)
10
12
Room Rent (Actual Expenditure up Tk. 500 Tk.
to a Maximum Amount Per Day)
1,000
Consultation Fee (Actual Fee up to a Tk. 300 Tk. 500
Maximum Amount Per Visit & One
Visit Daily)
Routine
Investigations
(Actual Tk.
Tk.
Expenditure up to a Maximum 1,000
1,200
Amount)
In Case of Surgical Treatment
Tk.
Tk.
2,000
4,000
In Case of Conservative Treatment
Tk.
Tk.
5,000
10,000
Surgery (Actual Expenditure up to a Maximum Amount)
Major Intermediate
Tk.
Tk.
12,000
14,000
Charges included for Surgeon, Tk.
Tk.
Assistant, Operation Theater & 6,000
8,000
Anesthesia
Ancillary Services (80% of Actual Tk.
Tk.
Expenditure up to a Maximum 2,000
5,000
Amount)

Deluxcare
Tk.
75,000
15
Tk. 1,500

Exclusive
care
Tk.
100,000
18
Tk. 1,800

Tk. 500

Tk. 500

Tk. 1,400

Tk. 1,600

Tk.
2,000

Tk. 6,000

Tk. 8,000

Tk.
12,500

Tk. 15,000

Tk.
10,000
Tk.
18,000

Tk.
16,000
Tk.
10,000

Tk. 20,000

Tk. 8,000

Tk. 10,000

Tk. 12,000

Royal
care
Tk.
140,000
20
Tk.
2,000
Tk. 500

Tk.
22,000
Tk.
15,000
Tk.
12,000

Premium (For each insured per year) based on Age Attained (in Years)
Benefit Grades
18 to 35 Years
Employee
Spouse
35+ to 45 Years
Employee
Spouse
45+ to 50 Years
Employee
Spouse

Master
care

Super
care

Deluxcare Exclusive
care

Royal
care

Tk. 600
Tk. 510

Tk. 1,080
Tk. 920

Tk. 1,535
Tk. 1,310

Tk. 1,920
Tk. 1,630

Tk. 3,360
Tk. 2,855

Tk. 750
Tk. 635

Tk. 1,350
Tk. 1,145

Tk. 1,795
Tk. 1,520

Tk. 2,160
Tk. 1,835

Tk. 3,780
Tk. 3,210

Tk. 1,050
Tk. 895

Tk. 1,890
Tk. 1,605

Tk. 2,300
Tk. 1,955

Tk. 2,640
Tk. 2,245

Tk. 4,620
Tk. 3,930

16

50+ to 55 Years
Employee
Spouse
55+ to 60 Years
Employee
Spouse
60+ to 65 Years
Employee
Spouse
Each Child (Below 25
Years)

Tk. 1,500
Tk. 1,275

Tk. 2,700
Tk. 2,295

Tk. 3,060
Tk. 2,605

Tk. 3,360
Tk. 2,855

Tk. 5,880
Tk. 4,995

Tk. 2,100
Tk. 1,785

Tk. 3,780
Tk. 3,215

Tk. 4,075
Tk. 3,420

Tk. 4,320
Tk. 3,670

Tk. 7,560
Tk. 6,425

Tk. 3,150
Tk. 2,678
Tk. 510

Tk. 5,670
Tk. 4,823
Tk. 920

Tk. 6,113
Tk. 5,130
Tk. 1,310

Tk. 6,480
Tk. 5,505
Tk. 1,630

Tk. 11,340
Tk. 9,683
Tk. 2,855

Maternity Benefit (Maximum Amount as per Benefit Schedule above)

Benefit Grades
Normal Delivery
Caesarian Delivery

Master care
Tk. 5,000
Tk. 10,000

Super care
Tk. 7,500
Tk. 15,000

Deluxcare
Tk. 10,000
Tk. 20,000

Exclusive care
Tk. 12,500
Tk. 25,000

Royal care
Tk. 15,000
Tk. 30,000

For Maternity Benefit, an Extra Premium @40% shall be charged on the Basic Premium of the
beneficiary group.

Group Discount Schedule

Size of Group
Up to 100
101 500
501 1000
1001 - 2000
2001 & Above

Percentage of Discount (%)

Nil
5%
7.5%
10%
12.5%

No Claim Discount Schedule

No Claim Years
Discount
Renewal Premium
One Year
10%
Two Consecutive Years
20%
Three Consecutive Years 30%

on

VAT if imposed by government, shall have to be paid by the organization concerned.

For large groups a "fixed premium rate" irrespective of the age is offered upon receiving the list of
members to be insured.
Customized Plan

17

Benefit Schedule & Premium Rate

Benefits desired has to be provided by the client

A "fixed premium rate" irrespective of age is offered on receipt of the list of members to be
insured.

5.2 Protective Islami Life Insurance Ltd.

5.2.1 Hospitalization Insurance Scheme
(Comprehensive Plan)
Group Hospitalization Insurance Scheme is a comprehensive scheme designed for coverage of
hospitalization treatment expenses of an insured due to illness or injury sustained during the period of
coverage.
5.2.2 Salient Features

Direct payment of treatment expense by the Company at designated hospitals.

Reimbursement of expenses for treatment at non-designated hospitals.
Treatment at any renowned hospital of the country by consultant of own choice.
Membership Card for each insured to facilitate preferential service.
Scope for inclusion of spouse & children under the Plan.
Scope for Overseas Treatment.
Scope to enjoy Maternity Benefit.
Coverage of Pre & Post Hospitalization expenses.

5.2.3 Scope
The scheme cover reasonable and necessary treatment expenses of an insured member within his
entitlement as per benefit schedule, at any Govt. Hospital as well as renowned private hospital/clinic
registered as such with the legitimate authority of the country.
Eligibility for coverage under the Scheme:
Any employee aged between 18 and 60 years & is in good health shall be eligible for coverage
under the scheme.
Similarly a new employee shall also be eligible to join the scheme during their good health upon
intimation to the company and payment of premium.

18

 Besides, spouses up to the age of 60 years, dependent children from day 01 (one) up to the age of
25 (twenty five) years residing with the employee & is in good health may also be included under
the scheme. Inclusion of dependent family members (Either spouse or spouse with children)
should be on full participation basis (group concept).
5.2.4 Duration of the Contract
One or Three years from the date of commencement. A contract shall be signed initially which may be
renewed on mutual agreement.
5.2.5 Medical Requirement
No medical examination is required. A Membership Form to be filled in by each employee containing a
declaration of health status for him-self & dependents to be covered under the scheme shall suffice.
5.2.6 Overseas Treatment
Coverage round the clock inclusive of Accidents and Emergencies (including holidays)
Option for treatment at any renowned Hospital, by consultants of employees own choice.
Preferential services& Direct Payment of treatment expenses by Protective Islami Life at
designated hospitals.
Reimbursement of expenses to the insured for treatment at non-designated hospitals.
Waiver of preliminary Medical Examination during enrolment.
Scope for inclusion of new member under the Scheme at any time.
Scope for inclusion of Spouse & Children under the plan.
Scope to enjoy Maternity Benefit
5.2.7 Overseas Treatment coverage
Inpatient treatment at any renowned hospital or clinic in India, Bangkok or elsewhere except
Israel shall be covered, if satisfactory local treatment is not available and a local consultant
advises such treatment. But, before going for such treatment a member should notify the
company except for emergency treatment required by a member while on tour abroad.
The claim shall be reimbursed for treatment expenses only, in a hospital/clinic as an inpatient, at
standard rate, as may apply for such treatment at Designated Hospitals of the company in
Bangladesh, within the benefit limit as per schedule and payable in Bangladeshi currency at
exchange rate prevailing at that time.
5.2.8 Pre-Hospitalization
Coverage shall include expenses for the investigations done up to seven (07) days pre-confinement as per
doctors advice at the time of referring a patient for Hospitalization.
5.2.9 Post Hospitalization
Coverage shall include a post discharge consultation within 07 days of release from hospital.
Coverage of treatment expenses shall include:
19

Hospital accommodation (Room & Board)

Surgical Operation
Consultation fee
Medicines & Accessories
Medical investigation
Ancillary service:

Registration or Admission, Labor Room Service, Blood Transfusion, Post-Operative Care, Local
ambulance services to Hospital, Physiotherapy, Chemotherapy, Radiotherapy, Dialysis, procedural
charge, Dressing, Nebulization, Oxygen inhalation, ventilator charge etc.
5.2.10 Non-Reimbursable Expenses
Food, Food Supplement & Energy Builders egg. Milk, Horlicks, Non Medicine Item like Diapers,
Sanitary Pad etc., Extra corporeal durable medical appliances e.g., Hot water bag, BP Machine,
Telephonic bill, expenses not incurred for patient, any non-specific (miscellaneous) expense, VAT,
Service Charge, Rent-a-Car, Herbal/ Ayurvedic / Homeopathic/ Alternative-care Medicine, Cosmetic
Cream, Oil, Water Purifier, Expenses incurred for/by Donor
5.2.11 Major Exclusions from Coverage
Hospitalization Treatment Expenses related to:- Congenital infirmity (anomaly), Existing permanent
disability or Deformity, Surgical treatment of any pre-existing condition within 3 months of coverage,
ongoing or follow up treatment of any existing medical conditions, Self-inflicted injury, Psychiatric
disorder, Un-lawful activity, Alcoholism & Drug Addiction, Attempted suicide, Contraceptive Measures,
Outpatient treatment expenses & procedures, AIDS & HIV disease, Dental & Ophthalmic Treatment,
Cosmetic Treatment (except required for injury or burn sustained during contract period), Treatment for
Family Planning purpose (including Sterility, D&C), in-fertility or sub-fertility, any treatment related to
pregnancy or childbirth (if maternity option is not taken), rest, convalescence, rejuvenation cure,
slimming beautification, Health checkup, prophylactic and immunization procedures, acupuncture,
Circumcision or other religious or social rituals.

5.2.12 Claim Settlement Procedure:

(A) Direct Payment (For Treatment at Designated Hospitals):
(B) Reimbursement (For Treatment at Non-Designated Hospitals):
Hospitalization Insurance Scheme
Benefit Schedule with Premium Rates (minimum employee 150)

20

Plans

Plan A

Plan B

Plan C

Plan D

Plan E

Max.
Benefit Tk. 50000
Per Insured Per
Hospitalization

75000

100000

150000

200000

Accommodation 20000
Limit
per
Hospitalization

30000

40000

60000

80000

Daily Hospital 1000

Room Rent (At
actual up to a
Maximum)

1500

2000

3000

4000

ICU
Limit 10
maximum per
Hospitalization
Other in-patient 30000
treatment
expenses

10

12

15

15

45000

60000

90000

120000

Maternity
Benefit

Caesarian
Delivery

Normal
Delivery

Legal
Abortion
or
Miscarriage

Tk. 30,000/=

Tk. 15,000/=

Tk. 40,000/=

Tk. 20,000/=

Tk. 10,000/=
Tk. 15,000/=

All other In-patient treatment expenses includes surgical expenses, consultation fees, medicines, relevant
investigation and other ancillary services (excluding Room and ICU charges) (At actual up to a maximum
per Hospitalization.)
Maternity Benefit is for one Pregnancy in a contract year at actual as per Benefit Schedule above up to a
maturity.

21

6.0 Deposit Pension Scheme

6.1 Sunlife Insurance Company Ltd.
Deposit Pension Scheme
Mode of payment of insurance premium in general monthly.
Monthly Premium Rate (Tk.): 100, 200, 300, 400, 500, 1,000, 1,500,
2,000 up to 10,000.
Term of the insurance: 10, 15 or 20 Years.
The age of insured must be within 45 and age at maturity must be not exceeded 65 years.

6.1.1 Benefits:
1.
In case of death of the insured the amount equivalent to SUM ASSURED with ACCRUED
BONUSES will be paid.
2.
If the Policyholder survive full term of the policy, SUM ASSURED and ACCURED BONUSES
become payable. or
3.
If the Policyholder survive full term of the policy, a monthly pension at the following rate of the
insured amount shall be paid as under:

PENSION

PENSION TERM

RATE OF

PER THOUSAND (TK.)

MONTHLY PENSION

1000

05 Years

Tk. 19.52

1000

10 Years

Tk. 11.83

1000

20 Years

Tk. 09.42

6.1.2 TABLE OF MONTHLY PENSION AMOUNT AGAINST MONTHLY PEMIUM PAID.

MONTHLY PREMIUM

PENSION TERM

MONTHLY PENSION
PAYABLE

22

Tk. 100

05 Years

Tk. 250

Tk. 100

10 Years

Tk. 150

TABLE SUM ASSURED COVERED AGAINST MONTHLY PREMIUM PAID. (Premium Figure in
Taka)
MONTHLY

10 YEARS TERM

15 YEARS TERM

20 YEARS TERM

PREMIUM
Tk.100

Tk. 12,000

Tk. 18,000

Tk. 24,000

Tk. 200

Tk. 24,000

Tk. 36,000

Tk. 48,000

Tk. 300

Tk. 36,000

Tk. 54,000

Tk. 72,000

Tk. 400

Tk. 48,000

Tk. 72,000

Tk. 96,000

Tk. 500

Tk. 60,000

Tk. 90,000

Tk. 120,000

Tk. 1,000

Tk. 120,000

Tk. 180,000

Tk. 240,000

Tk. 1,500

Tk. 180,000

Tk. 270,000

Tk. 360,000

Tk. 2,000

Tk. 240,000

Tk. 360,000

Tk. 480,000

6.2 Fareast Islami Life Insurance Company Limited

Fareast Deposit Pension Scheme (FDPS)-with profits:
This policy is designed to provide Islamic insurance service to the people from all income categories of
society people. The policy is taken in unit basis. One person can take minimum 2 units. The features are
given below:

23

Age of the assured at commencement of

policy
Minimum sum assured
Term of policy
Premium Payment
Accidental Death Benefit
Payment at maturity
Pension benefits

Minimum 43 years.
Minimum 2 units can be taken. Per unit 12,000/12 years
Usually monthly installment. But year, half year and
semiannual payment possible upon payment of 12
months installment in advance.
Full sum assured with adjusted loss and profit.
25% after 6 years and rest 75% at the maturity
Policyholder can take pension for 10 years.

7.0 Term Insurance

7.1 Jiban Bima Corporation
Group Term Insurance:Group Term Insurance provides for payment of assured money in case of death of any employee during the term of
the
policy.
There
is
no
maturity
benefit.

7.1.2 Benefits:

24

Survival Benefits:
No survival benefit is available.
Death benefits:
Sum assured

7.1.3 Plan Parameters:

*

Minimum

Maximum

Entry Age (years)

20

50

Group (Number)

50

No limit

10 times of
basic salary

50 times of
basic salary

Sum Assured (Taka)

Term (Year)
Mode of Payment

Maximum Maturity
Age

Policy Loan Available

Yearly

60 Years

No

7.2 Padma Islami Life Insurance Ltd.

Karmajibi Kalyan Bima (Group term Insurance)
7.2.1 Features of the plan
Amount payable on normal Death
Accidental Death Benefit
Age of the assured at commencement of
policy
Minimum sum assured
Maximum age at expiry
No of members of group

Basic sum assured

Double of sum assured
Minimum - 18 years and Maximum - 59 years
Taka 50,000/Maximum 60 years.
Minimum 50

7.2.2 Benefit of Plan

1.
2.
3.
4.

Amount payable on normal Death

Basic sum assured.
Accidental Death Benefit
Double of sum assured.
Basic sum assured payable on total and permanent disablement defined as permanent loss of eye
sight of both eyes/loss of both hands / loss of feet /loss of one foot and one eye/loss of one foot and
one hand /loss of one hand and one eye.
50% of basic sum assured payable as partial disablement benefit payable on permanent loss of either
one foot or one hand/ total and permanent loss of hearing in both ears/total and permanent loss of
eyesight of either eye/total and permanent loss of thumbs or index fingers.
25

5.
6.
7.
8.

20% of basic sum assured payable for repatriation of dead body of the deceased assured / funeral cost
of the deceased assured.
Stipend payable to the nominee on normal death of the life assured = 5% of basic sum assured to be
divided equally and payable monthly for 12 months.
Stipend payable to the life assured on accidental death or on total and permanent disability = 5%
basic sum assured to be divided equally and payable monthly for 24 months.
No maturity benefit is paid at the completion of policy/group contract.

26

Chapter-3

27

8.0 Findings and Recommendations

Bangladesh is a Muslim country and the country people has strong religious belief. The insurance market
in Bangladesh is also emerging with the increase of literacy rate and expansion of business. Many people
of our country who have strong religious belief are reluctant to take conventional insurance due to
presence of interest (riba), uncertainty (gharar) and gambling (maisir). It is good opportunity for the
Takaful business operator to cover the people who want to have Takaful insurance for security. Like
conventional insurance operation Takaful business operation also have some problems. The problems and
prospects of Takaful business operation in Bangladesh are given below:

8.1 Differences between Takaful and Conventional Insurance Products in

Bangladesh

Fire Insurance
The main difference between fire insurance covered are that Islami insurance covers only true
risks, natural calamities, uncertain economic conditions are not covered by Takaful.
Additionally General Takaful does provide fire coverage for valuable assets.
All other features of fire insurance are similar.

Endowment policies
Endowment policies of Takaful companies are less relieved in terms of the age of the assured and
sum assured
Conventional endowment policies provide a lesser value (three times less) in case of death of the
policy holder however the period of insurance premium is comparatively high then Takaful
endowment

Health Insurance
Conventional health insurance products are more diversified than Takaful health insurance
Other coverage and expenses are similar to both products.

Deposit Pension Scheme

Conventional DPS products have higher maturity period and more smooth in settlement of claims
28

 Takaful DPS products are less diversified

Term Insurance
Takaful group term insurance products are more preferable because of ots higher return and
certainty of payment of claim
Conventional term insurance schemes are more strict in term of entry in the scheme however do
not provide anything on survival of the insured

8.2 Challenges for Takaful Operators

The potential of Takaful is beyond question. But there are many hurdles to overcome if this market is to
realize its potential.

Human resource

Human resources pose a major obstacle to growth, as the market is facing a severe shortage of qualified
staff who understand both technical insurance principles and have an adequate awareness of Shariah
finance.

Customer awareness

One of the biggest challenges is creating customer awareness. Many Muslims live under the
misconception that insurance is contrary to the principles of Islam, particularly with regard to life
insurance. People have to be made aware that Takaful provides an acceptable religiously validated
solution. Similarly, non-Muslims need to be made aware of why Takaful is ethical.

Lack of unified rules

In Bangladesh Takaful business operation is almost new. It has stated in the year 2000. So it is needed to
set out clear principles on how Takaful business should be taxed, and to create a regulatory regime that
does not treat Takaful less favorably than conventional insurance.

Financial instrument

The limited availability of short-term non-equity financial instruments such as sukuk and Shariahcompliant money market instruments equivalent to treasury bills represent a further challenge for Takaful

29

companies, making managing their investment portfolio more challenging than for conventional insurers
who can simply invest in bonds and cash assets.

Lack of Islamic Law

Takaful business operation is different from the conventional insurance companies. But all the Islamic
insurance company need to follow the insurance act for conventional insurance. At least government can
take the steps to amend the insurance act 1938 for Islamic insurance operation.

Product innovation and after sale service

Along with these challenges, Takaful providers must enhance their product innovation and continue to
offer a high level of customer service. They must be able to understand evolving customer and marketspecific needs and be willing to renew or re-engineer product design and consumer benefit packages, as
well as expand customer reach across various distribution channels.

Lack of commitment by the company

The members of the Islamic life insurance business do not follow Islamic rules and Shariah in each
operational activity strictly. This discourages the customers to take Islamic insurance in some cases.

Lack of professionalism

There is lack of professionalism in Takaful insurance operation. There are a few numbers of insurance
professional and actuary in our country. The market research and other financial research for Takaful
business is also in insignificant magnitude. Because of all those problems there is no dynamic change in
the Takaful business operation in Bangladesh.

8.3 Prospects for Takaful Business Operators

Takaful insurance has bright prospect in Bangladesh. Besides the conventional insurance Islamic
insurance can flourish in our country. The prospect of Takaful business in Bangladesh In given below:

Religious sentiment

The people of Bangladesh have strong religious belief. As Takaful insurance is based on Islamic Shariah,
it can take the place of conventional life insurance more easily.

Literacy rate

The literacy rate of country is in increasing trend. People understand the need of insurance for savings
and to protect family and him from unwanted contingencies. Takaful business can take this opportunity by
following the Islamic Shariah and by offering diversified products, services to the people.
30

Business development

The prosperity of business and per capita income of the country people is another opportunity for Takaful
business.

Group Insurance

Takaful life insurance companies in Bangladesh have introduced group insurance policies for the business
and other institution. It will cover a lot of people in a single policy. And most of the Islamic financial
institutions are now taking Islamic insurance from the Takaful life insurance.

Micro Insurance

The Takaful life insurance companies are now offering micro insurance. It enables the poor people to take
insurance for future savings and for unwanted contingencies. And it increases the efficiency of economy.

Hajj Bima

Takaful business offer hajj bima. It is an important policy for the Muslim people. If the insurance
companies can make this product more attractive by providing additional services it will attract more
people.

Lower rate of premium

In abroad people who want to take policy need to pay a handsome amount as installment. But the Takaful
insurance has offer product like Islamic DPS and other micro insurance policy in which the policyholder
need to pay only a minimum amount. So more people can buy policy if the insurance company can
successfully aware the people regarding policy.

Islamic life insurance companies must focus on product differentiation and diversification
that will increase their value and acceptance among customers as almost all these
companies offer products with more or less same features.
Government must focus on making the existing life insurance companies more efficient
rather than increasing them in numbelife insurance. They must be properly educated
about how the mechanism can work in the line of Islamic Shariah. It requires different
training program regarding marketing Islamic life insurance products and provision of
strict regulations to the agents and staffs.
Insurance Development and Regulatory Authority must make certain proper Shariah
compliance through ensuring presence of efficient Shariah scholars in the Shariah council
of Takaful life insurance companies.

31

 Considering the preference toward Islamic life insurance, government can convert the
existing conventional life insurance companies into Takaful one rather than making the
market overcrowded.

9.0 Conclusion
Insurance, especially life insurance is an essential part of the social protection needed for any
society. It has its rightful place in Islam but years of misunderstanding and misconception have
created mental blocks against insurance in the Muslim culture. We believe Takaful or Cooperative Insurance is the right way forward towards the breakdown and removal of such mental
blocks. This type of insurance has great deal to offer in Muslim countries where the spread of
insurance per person and per cent of GDP can increase manifold if the system of Takaful is
projected correctly and understood properly. It can genuinely enlarge the insurance market in
areas where traditional insurance has not been able to grow, as it should have done. This is true
of personal lines, especially of life insurance or family Takaful. In order to create the essential
trust and confidence, which is needed to remove the mental blocks just mentioned, the efforts to
develop and manage Takaful business must be genuine. Investors, entrepreneurs and insurers
have good opportunity to take up the challenge of developing insurance business on Islamic
principles. After all Takaful is intrinsically in accordance with the indigenous consumer needs.

32

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