(Source: The Star, Malaysia, Contributed by Bank Negara Malaysia.)
A family takaful plan is a long-term savings and
investment programme with a fixed maturity period.
Apart from enjoying investment profit, the plan
provides mutual financial assistance among its
participants.
The family takaful plan is a financial programme that
pools efforts to help the needy in times of need due
to untimely death and other mishaps resulting in
personal injury or disablement.
The takaful plans designed by the takaful company
would enable participants to participate in a takaful
scheme with the following aims:
(a) To save regularly;
(b) To invest with a view of earning profits which are
syariah-compliant; and
(c) To avail of cover in the form of payment of
takaful benefits to heir(s) should a participant die
before the maturity date of his takaful plan.
The operations of family takafu·
A person who participates in any family takaful plan
is called a participant. A participant may choose any
one of the plans offered by the company. The family
takaful plans have a defined period of participation.
The takaful company and the participant will enter
into a long-term takaful contract, which is based on
the principle of Al-mudharabah (profit-sharing).
The takaful contract spells out clearly the rights and
obligations of the parties to the contract. The
participant is required to pay regularly the takaful
instalments in consideration for his participation in
the takaful plan.
The participant will decide the amount of takaful
instalments that he wishes to pay, but such an amount
shall be subject to the minimum sum as determined by
the company.
Each takaful instalment paid by the participant shall
be divided and credited by the takaful company into
two separate accounts, namely the participant’s
account and the participant’s special account. A
substantial proportion, for example, such as 93% of
this instalment is credited into his participant’s
account solely for the purpose of his savings and
investment.
The balance is credited into his participant’s special
account as tabarru’ for the purpose of mutual help.
Mutual financial assistance such as takaful death
benefits to fellow participants is paid from the
participant’s special account. What proportion of the
takaful instalment to be relinquished as tabarru’ and
credited into the participant’s special account is
determined based on sound actuarial principles.
The takaful instalment credited into these two
accounts will be pooled as a single fund for the
purpose of investment activities undertaken by the
takaful company in a manner permitted by the Syariah.
Any profits generated from the investment shall be
shared between the participant and the company in a
ratio to be mutually agreed between the participant
and the company in accordance with the contract of
Al-Mudharabah. For instance, if the ratio agreed is
7:3 then the participant shall be entitled to 70% of
the profits whilst the company shall be entitled to
30%.
The participant’s share of the profits shall be
credited into his participant’s account. With the
accumulation of such profits, the balance in the
participant’s account will increase over a period of
time.
Family takaful benefits
In the event that a participant should die before the
maturity of his family takaful plan, the following
takaful benefits shall be paid to him:
(i) The total amount of the takaful instalments paid
by the participant from the date of inception of his
takaful plan to the due date of the instalment payment
prior to his death and his share of profits from the
investment of the instalments which have been credited
into his participant’s account;
(ii) The outstanding takaful instalments which would
have been paid by the deceased participant should he
survive. This outstanding amount is calculated from
the date of his death to the date of maturity of his
takaful plan which shall be paid from the
participant’s special account as agreed upon by all
the participants in accordance with the takaful
contract.
If a participant survives until the date of maturity
of his takaful plan, the following takaful benefits
shall be paid to him:
(i) The total amount of takaful instalments paid by
the participant during the period of his participation
plus his share of profits from the investment of the
takaful instalments credited into his participant’s
accounts.
(ii) The net surplus allocated to his participant’s
special account as shown in the last valuation of the
participant’s special accounts.
In the event that a participant is compelled to
surrender or withdraw from the takaful plan before the
maturity of his takaful plan, he shall be entitled to
the surrender benefits.
The participant is entitled to receive the proportion
of his takaful instalments that have been credited
into the participant’s account including his share of
investment profits. However, the amount that has been
relinquished as tabarru’ will not be refunded to him.
The various types of family takaful plans available in
the market are:
(a) Family takaful plan for education
(b) Family takaful mortgage plan
(c) Group family takaful plan
(d) Group hospitalisation and medical benefit
The operations of general takaful
General takaful schemes are basically contracts of
joint-guarantee, on a short-term basis (normally one
year), between groups of participants to provide
mutual compensation in the event of a defined loss.
The schemes are designed to meet the needs for
protection of individuals and corporate bodies in
relation to material loss or damage resulting from a
catastrophe or disaster inflicted upon properties,
assets or belongings of participants.
In the event of a catastrophe or disaster resulting in
a loss or damage to a property or bodily injuries or
other physical disability to a person, the owner of
the property or the person concerned may suffer
substantial financial losses.
For instance, if a house is destroyed or damaged by
fire, the owner would certainly require a sufficient
sum of money to repair the house, or rebuild a new one
as well as enough money to replace the damaged
furniture, fixtures and fitting.
Similarly, a person being injured in an accident would
require an adequate sum of money to pay for the
medical treatment.
With the various general takaful schemes offered in
the market, that person would be assured of takaful
benefits in case of misfortune resulting from such
loss or damage.
Participants of a general takaful scheme shall also
enter into a contract with the company on the basis of
the contract of Mudharabah. The contract stipulates
the right and obligations of the participants as well
as the company.
In consideration for participating in the various
schemes, the participants agree to pay the takaful
contributions as tabarru’. The company manages the
general takaful business including managing the
investment of the general takaful fund assets.
As the al-Mudharib, the takaful company will invest
the general takaful fund in line with Syariah
principles and all returns on the investment will be
pooled back to the fund.
In line with the virtues of cooperation, shared
responsibilities and mutual help as embodied in the
concepts of takaful, the participants agree that the
company shall pay from the general takaful fund,
compensation or indemnity to fellow participants who
have suffered a defined loss upon the occurrence of a
catastrophe or disaster.
The fund shall also pay for other operational costs of
general takaful business such as for the retakaful
arrangements and the setting up of technical reserves.
Should there be a surplus (profits) in the general
takaful fund after deducting all the operational costs
of general takaful, that surplus will be shared
between the participants and the company – provided
the participants have not incurred any claims, and
that no takaful benefits have been paid to them.
This sharing of the surplus will be in a ratio agreed
in accordance with the contract of Al-Mudharabah. If
the ratio agreed is 6:4, then 60% of the surplus will
be shared among such participants whilst the balance
40% is the share of the company.
