Glossary
Takaful
Islamic insurance, where members contribute to a shared pool that pays out to whoever suffers a loss.
تكافلtakāful
Takaful replaces conventional insurance with mutual guarantee: participants donate into a fund on the basis that it will help whichever of them suffers a loss, with the operator managing the fund for a fee or a share of profit. AAOIFI covers it in Shariah Standard No. 26 on Islamic Insurance. On cards it appears as bundled cover, and Bank Negara's SAC ruled that charging ujrah for personal accident takaful cover on a card is not in line with Shariah, because the cardholder is not a direct participant in the scheme, but that giving the cover as a gift is permissible.
Related terms
MaysirGambling: gaining at someone else's expense purely on chance.GhararUncertainty in a contract so severe that neither side really knows what they are agreeing to.HibahA gift given freely, with nothing promised in return.Tabarru'A donation or voluntary contribution, given without expecting anything back.
Sources
- AAOIFI Shariah Standard No. (26); Bank Negara Malaysia, Shariah Resolutions in Islamic Finance, 2nd edition, item 91