Takaful is an alternative form of cover that a Muslim can avail himself against the risk of loss due to misfortunes.
Takaful is based on the idea that what is uncertain with respect to an individual may cease to be uncertain with respect to a very large number of similar individuals.
Insurance by combining the risks of many people enables each individual to enjoy the advantage provided by the law of large numbers.
In modern business, one of the ways to reduce the risk of loss due to misfortunes is through insurance which spreads the risk among many people.
The concept of insurance where resources are pooled to help the needy does not contradict Shariah.
However, conventional insurance involves the elements of uncertainty (Al-gharar) in the contract of insurance, gambling (Al-maisir) as the consequences of the presence of uncertainty and interest (Al-riba) in the investment activities of the conventional insurance companies.
These factors (uncertainty, gambling and interest) contravene the rules of Shariah. It is generally accepted by Muslim jurists that the operation of conventional insurance does not conform to the rules and requirements of Shariah.
Takaful is based on the idea that what is uncertain with respect to an individual may cease to be uncertain with respect to a very large number of similar individuals.
Insurance by combining the risks of many people enables each individual to enjoy the advantage provided by the law of large numbers.
In modern business, one of the ways to reduce the risk of loss due to misfortunes is through insurance which spreads the risk among many people.
The concept of insurance where resources are pooled to help the needy does not contradict Shariah.
However, conventional insurance involves the elements of uncertainty (Al-gharar) in the contract of insurance, gambling (Al-maisir) as the consequences of the presence of uncertainty and interest (Al-riba) in the investment activities of the conventional insurance companies.
These factors (uncertainty, gambling and interest) contravene the rules of Shariah. It is generally accepted by Muslim jurists that the operation of conventional insurance does not conform to the rules and requirements of Shariah.
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