What is Takaful:
The Takaful Insurance is founded on the cooperative principle and on the principle of separation between the funds and operations of shareholders, where the number of individuals shares the risk of potential loss. ASCANA manages insurance operation as agent (Wakeel) How General Takaful Works Takaful refers to the Islamic concept where you contribute a sum of money to a Takaful fund in the form of contribution (tabarru’).
You undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer any form of misfortune, either arising from death, permanent disability, loss, damage or any other such misfortunes as covered under the Takaful you personally undertake. The Contributions collected from the policyholders are considered as donations and they constitute the Takaful fund from which all claims are reimbursed.
At the end of each financial year, after deduction of expenses, any remaining cash surplus to be returned to the policyholders in the form of cash dividends or distributions. In this respect, Takaful business is different from the conventional insurance in which the policyholders, rather than the shareholders, solely benefit from the profits generated from the Takaful and Investment assets. The operational framework of Takaful avoids elements of Riba (interest or usury) and Gharar (unknown or ambiguous factor in the operation of contract).
Riba and Gharar are the basic reasons why Muslim scholars regard conventional insurance as being against the principles of Shari’ah. If there is a deficiency in the Takaful Fund, the Shareholders Fund will give a Qard Al Hasan (interest free loan) to the Takaful Fund to cover deficit. The Annual outcome of TAKAFUL is total amount of claims paid and investment income.