With a more guaranteed interest, Takaful has changed its status from just an alternative to something of a requirement or obligation. SYED MOHEEB SYED KAMARULZAMAN discusses.
Man and his wealth are inseparable. Thus, Islam recognizes the human need to acquire wealth, and in relation to this, our religion has outlined a definite set of laws to be followed by man in his interaction with wealth as a means to enjoy the comforts of life.
Having wealth alone without it being managed and developed for the goodness of mankind is contrary to what is demanded by Islam. Islam decrees such wealth to be developed; and prohibits one from freezing it.
Nowadays, people are beginning to turn to investments as an alternative form of income to achieve their future objectives. Yet today our society is overwhelmed by various investment methods; both legal and illegal, including ‘get-rich-quick’ schemes.
It is undeniable that the increased awareness for investing among the Islamic community today is very encouraging. However, such enthusiasm is not a reason to ignore the difference between the real investment methods and the bogus ones; for failure to distinguish between them may produce catastrophic results in the future. Therefore, every member of society should have some basic knowledge related to their investments before deciding to invest.
With the development of the Takaful industry, Takaful operators are also offering many innovative products that meet the needs of the society. To fulfill the customers’ needs not only in terms of Takaful coverage but also to reap the profits from the investment activities of Takaful handlers, Takaful Ikhlas is offering a product which combines the elements of Takaful coverage together with the elements of investment; known as ‘investment-linked’. Subscriptions to these investment-linked products are expected to continue to escalate in line with the increasing income of Malaysians.
Investment-linked Takaful plan
The investment-linked Takaful plan is a long-term savings plan based on the method of investing in a group of shares which are divided into several units (something akin to unit trusts) and combined with Takaful protection benefits.
The significant distinction between the Takaful investment-linked products compared to other investment methods is the element of protection. A participant will not only reap the benefits of investment profits, but will also enjoy the elements of protection should the participant suffer any of the risks covered under the plan.
Tabarru
In the Takaful system, the implementation of Tabarru is bound to the principles of Takaful: to create a mutual atmosphere of helping one another. As a simple analogy, participant A would make a contribution to help participant B, and participant B would donate to help participant A. This would create a helping environment known as Takaful. Here, participants help one another, contrary to conventional insurance system where the dealings only occur between participants and the company. The role of Tabarru that serves as a charitable contribution is regarded as very special in Islam.
Through the Takaful system, this practice can be even better, more systematic and professional. Furthermore, the practice of Tabarru through this system is termed as a ‘first class’ Tabarru, as it is done sincerely. The chance for us to seize this opportunity is wide open whether we become a Takaful customer, employee or even a representative (agent).
Participants who joined the investment-linked Takaful plan are also making the right choice for choosing an investment method which is line with Shariah. The Takaful system is free from the elements of gharar, riba and maysir. The absence of gharar shows that Takaful is a transparent system as it does not hide the facts and is free from any hidden agenda.
Regulators
Participants need not feel apprehensive because the responsible bodies in relation to the Takaful industry in Malaysia, such as the central bank, Bank Negara Malaysia (BNM), have established a regulatory framework of Shariah compliance which is robust and efficient.
The Takaful Act 1984 allocated several provisions that require Takaful operators to ensure that all their activities comply with Shariah and this is accompanied by circulars issued from time to time by BNM.
In fact, based on the Act each Takaful operator must establish a Shariah committee to ensure that their operations are Shariah compliant. Besides that, the Takaful operators must also make available a full-time Shariah officer on duty to ensure that every aspect of Shariah compliance is given priority.
Conclusion
With the wider availability of Islamic financial facilities such as Takaful in the market, which are offering a better product and a more guaranteed interest, choosing this Islamic facility has changed its status from just being an alternative to something of a requirement or obligation.
Syed Moheeb Syed Kamarulzaman is president and CEO of Takaful Ikhlas. He can be contacted at
[email protected]
.