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 and to achieve taqwa, or the highest devotion to Allah. Takaful Ikhlas shares its view on the relationship between Islamic insurance and investment strategy.
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. Our religion teaches its followers to make sure that every deed performed is received as a form of worship to Allah. Hence to achieve such purpose, the investment activities must comply with the Shariah law, based on the Qur’an, Al-Sunnah, Ijma’, Qiyas and Ijtihad. Allah commanded in Surah An-Nisa’ verse 29, which means: “O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. And do not kill yourselves (or kill one another). Surely, Allah is Most Merciful to you.”
Nowadays, people begin 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 not denied that the awareness for investing among the community today is very encouraging. However, such enthusiasm is not a reason for one to fail to distinguish between the real investment methods and the bogus ones; for this could produce catastrophic results in the future instead of success. Therefore, every member of society has to get hold of the basic knowledge related to the investment before deciding to invest.
With the rapid growth and development of the Takaful industry at present, Takaful operators are also offering many innovative products that meet the needs of 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 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.
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, akin to unit trusts, and combined with Takaful protection benefits. The significant distinction between the Takaful investment-linked product 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.
IKHLAS Premier Investment-Linked Takaful provides peace of mind to potential investors with sufficient financial protection through investments in any of the following investment funds; namely the Growth Funds, Balanced Funds and Fixed Income Funds. All these funds offer distinctive investment strategies to be chosen by future participants based on individual investment objectives.
Under the Premier Investment-Linked Takaful, participants have the opportunity to achieve a more lucrative income with only RM100 (US$32.26) per month contribution, and they are equipping their future with financial protection should any disaster befall them which leads to death or total & permanent disability (TPD). As for benefits in case of death or TPD, 100% of the total coverage plus the outstanding amount in all share units will be paid to the participant or his immediate family.
On the other hand, through IKHLAS Capital Investment-Linked Takaful, a single contribution is enough to give participants the opportunity to get a more lucrative return on forthcoming investments. It is a plan that provides added value both to the capital and protection simultaneously. Under this plan, participants can enjoy the highest return and protection on the investments they make. For example, with a one-time payment of RM5,000 (US$1,612.65), participants will enjoy a lucrative investment return and Takaful coverage required in the event of any disaster that leads to death or TPD. A participant or his next of kin can enjoy (subject to the terms and conditions) 100% of the Total Coverage (equivalent to 125% of the single contribution) in the case of death or TPD to the participant.
The investment-linked Takaful plan is not only unique in terms of worldly benefits to be enjoyed by the participants, but it also provides benefits for the Hereafter. This benefit can be enjoyed by the participants through the application of tabarru’ (donation), which is the core of the Takaful system.
In the Takaful system, implementation of tabarru’ is bound to the principles of Takaful, which is 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, as this would create a helping environment known as Takaful. Here, participants help one another, contrary to the 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.
These are among the advantages and the beauty of the Takaful system that are not found in the conventional insurance system: to enjoy the benefits of the Hereafter together with worldly returns. The following is a Quranic verse that proves a great reward is awaiting those who act in charity in the sight of Allah the Almighty. These are the words of Allah in Surah Al Baqarah verse 261, which mean: “The likeness of those who spend their wealth in the Way of Allah is as the likeness of a grain (of corn); it grows seven ears, and each has a hundred grains. Allah gives manifold increase to whom He pleases. And Allah is All-Sufficient for His creatures’ needs, All-Knower.”
Through the practice of tabarru’ we can enjoy a special reward from Allah. 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 first class tabarru’, as it is done sincerely; as in the saying “when the right hand gives, even the left hand does not know”. The chance for us to seize this opportunity is open whether we become a Takaful customer, employee or even a representative (agent). Hopefully, the amount of wealth we allocate as Takaful contributions will later become a blessed possession as it is revealed before Allah.
Participants who join 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 (risk), riba (usury) and maysir (gambling). 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, as in the Malay proverb: “There’s a shrimp behind the stone.”
Participants need not feel apprehensive because the responsible bodies in relation to the Takaful industry in Malaysia, such as Bank Negara Malaysia (BNM), the Central Bank of Malaysia, 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 Takaful Act, each Takaful operator must establish a Shariah committee to ensure their operations are Shariah compliant. Besides that, Takaful operators must also make available a full time Shariah officer on duty to ensure that every aspect of Shariah compliance is given priority.
The fact is that with the availability of Islamic financial facilities such as Takaful in the market, which is better and a more guaranteed interest, choosing this Islamic facility has changed its status from being an alternative to being more of a requirement or obligation.