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Presented by:
Tariq Mehraj
Today We expect to Answer:
•What is Takaful?
•How Takaful works ?
•What is General Model of Takaful?
•What is the relationship of Participants and Takaful
Manager?
•What are types of Takaful Model Exist?
•Comparison of different Takaful models?
Takaful: What is Takaful?
Takaful is a type of Islamic insurance, where members contribute money into
The word Tabarru is used to refer to a donation or a gif and the word
Ta’awun is used to refer to mutual assistance.
In Takaful, the participants make donations and assist mutually to tackle the
risk of loss due to certain events.
Takaful: How Takaful Works?
Takaful participants make contribution as donations into an insurance fund.
• The company creates a Waqf Pool and asks the people to make
contributions to the pool and become its member who wish to avail
Takaful facilities.
Company’s accounts and pool accounts are different from each other.
The company charges a Wakalah fee (Management Fee) against the
services provided by it.
• Companies invest the money of the Pool on its behalf on the basis of
“Mudaraba” or “Wakalah” in which the company act as “Mudharib” or
“Investment Manager” and the pool is treated as “Rab-ul-mal” or the
“Muwakkil” the Investor.
Takaful: General Model of Takaful?
• The number of Participants in the pool can increase over the period of
time and profit can also occur which causes the total sum of the pool
to increase.
Every takaful model is based one of the Islamic structures. The commonly
adopted models are the Mudaraba, Wakala, Waqf and Hybrid model.
Takaful: What are Takaful Models?
In the Mudaraba model, the fund manager is entitled to a share in surplus
but not entitled to a salary or any fee.
In the Wakala model, the fund manager is entitled to a specific fee but not
the share of the surplus.
The other important point is that the remaining amounts in the investment
account and claims account are distributed to the participant at the end.
But in the case of Waqf model, it would be retained as a reserve and not
distributed.
Takaful: Mudaraba Model
Takaful: Wakala Model
Takaful: Waqf Fund Structure
Takaful: Comparison of Takaful Models
Mudaraba Wakala Combined Wakala Waqf Saudi Cooperative
This is an amount set aside to make provision against claims that were
incurred but not reported until afer the end of the current financial
period.
• Equalization reserve