A Comparison between the Capitalist and the Islamic Insurance with a Focus on Deficit and Surplus
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TABLE OF CONTENTS
CHAPTER 01: INTRODUCTION1
References for Islamic Takaful1
Principles of Takaful2
Aims and Objectives3
CHAPTER 02: LITERATURE REVIEW5
Riba Free Insurance (Takaful)6
Conventional Insurance Requirements6
Mudaraba and Wakalah in takaful13
Islamic Insurance Products13
Participant's Special Account16
CHAPTER 03: METHODOLOGY22
Research Method and Design Appropriateness23
Qualitative Data Analysis25
CHAPTER 01: INTRODUCTION
Takaful is an Islamic insurance concept, based on Islamic mou'amalat (banking), respecting the norms and rules of Islamic law. This concept has been practiced in various forms for over 1400 years. It comes from the Arabic word Kafala, which means "guaranteeing each other" or "joint guarantee". In principle, the Takaful system is based on mutual cooperation, responsibility, assurance, protection and assistance between groups or participants. It is a form of mutual insurance (Bagsiraj, 2002).
References for Islamic Takaful
These fundamentals are based on the sayings of Prophet Muhammad . The scholars of Islam have decided, from the hadiths and verses, there must be a concerted effort to apply the concept of Takaful as the best way to address these needs. Examples:
Principle of cooperation: help each other in al-Birr al-Taqwa (virtue, piety, righteousness), but not to help one another in sin and transgression (Al Ma'ida v. 2) (Hussain and Sherifa, 2002)
Allah will always help His servant as long as it will help others (Narrated by Imam Ahmed ibn Hanbal and Imam Abu Dawood)
Responsibility principle: it is the relationships and feelings of people of faith between them, as with the body: when one member is affected by pain, the whole body is affected. (Reported by Bukhari and Muslim)
Two true believers (Mou'min) are as a construction in which each part strengthens the other. (Reported by Bukhari and Muslim)
Principle of Mutual Protection: By my soul, which is under the power of Allah, no one will enter Paradise if he does not assist its neighbor in distress. (Narrated by Imam Ahmad ibn Hanbal) (Iqbal and Philip, 2005)
Principles of Takaful
The below mentioned are the principles of Takaful:
Purchasers of an insurance contract cooperate with each other for their common good. Each subscriber pays the premium to help those in need. Losses are divided and liabilities spread according to the system of "pooling". The uncertainty is eliminated by the ...