Takaful (at times interpreted as "fortitude") is a cooperative arrangement on repayment or reimbursement in case of misfortune, coordinated as an Islamic or sharia-consistent option, in contrast to ordinary insurance, which by Islamic beliefs contains riba (usury) and gharar (unnecessary vulnerability).

Takaful insurance also known as fortitude

Under takaful, individuals and organisations, worried about risks, make customary commitments ("gifts") to be repaid or reimbursed to individuals in case of misfortune, which are overseen for their benefit by a takaful administrator. Like other Islamic money items, takaful is grounded in Islamic Muamalat (business and common demonstrations or dealings that are part of Islamic regulations).

Riba (usuary)

Riba is an idea in Islamic finances that alludes to charged interest. It has additionally been alluded to as usury or the charging of preposterously exorbitant loan fees. Additionally, there is also one more type of riba, as indicated by most Islamic law specialists, which alludes to the concurrent trade of merchandise of inconsistent amounts or characteristics.

This approach has been commended as offering a good alternative to insurance, as it "revitalises human resources, accentuates individual nobility, advances the local area self-improvement, and brings about monetary self-advancement"; yet additionally, it has also been reprimanded as having "dwindled" to an extent, due to an industry of "customary insurance.

Takaful is life insurance for muslims
Takaful methodologies cover prosperity, life, and general security needs.

Takaful insurance agencies were presented as an option to those in the business insurance industry, who want to follow the Islamic limitations on riba (interest), al-maisir (betting), and al-gharar (vulnerability) standards — which are all prohibited in sharia.


Gharar is an Arabic word that is related with risks, uncertainty and hazards. It is often described as a sale of something that is not yet here, for example, fish that have not been caught yet, or crops that have not been picked yet.

Understanding What Takaful Is

All those involved, meaning all policyholders in a takaful agreement, make a promise to one another and make a commitment to contribute to a pool or shared reserve, as opposed to paying expenses for insurance. The pool of contributions makes the takaful an asset. Every member's commitment depends on how much they want to be included, as well as their own conditions. A takaful agreement also presents the potential risk in detail, as well as the length of the agreement, which is very similar to a customary insurance contract.


Otherwise called maysir. Implies risk or gambling. Al-maisir is forbidden in the Islamic financial world since it makes abundance from chance rather than smart decisions.

The takaful asset is overseen and regulated in the interest of the members by a takaful administrator, who charges a settled-upon amount to take care of the asset. Similar to a customary insurance agency, costs include making deals and promoting, and guaranteeing.

all about takaful life insurance

Any claims made by members are paid out of the takaful asset and any overflow that might happen subsequent to making arrangements for the probable expenses of future claims, go to the members who contribute to the asset — not the takaful administrator. Those assets might be disseminated to the members as money profits or circulations, or by means of a decrease in ongoing commitments. An Islamic insurance agency working on a takaful asset should work under the following  standards:

  • It should work as indicated by Islamic standards. 
  • A reinsurance commission can only be paid to or received by other Islamic insurance and reinsurance organisations.
  • The insurance agency should keep two separate funds: a member and policyholder fund and a shareholder fund.


Tabarru signifies a type of genuine gift given to a party without anticipating any sort of trade or return from the party. It is considered to be a one-sided agreement which just requires one party to communicate the commitment without requiring any sort of trade.

Takaful vs Standard Life Insurance

Most Islamic legal advisers infer that regular insurance is inadmissible in Islam since it doesn't align with sharia for the reasons listed below:

  • Regular insurance incorporates a component of al-gharar or vulnerability.
  • Regular insurance depends on the idea and practice of charging interest. Meanwhile, Islamic insurance actually depends on tabarru, where part of the contributions made by the participants is treated as a gift. This is also the reason why policyholders in takaful are typically called participants.
  • Regular insurance is actually considered to be betting.
  • takaful is halal life insurance policy
    We know that takaful is considered halal in Islam, so any insurance contract that conforms to the standards of takaful ought to likewise be considered halal and, therefore, acceptable.

    Written by: James Webb

    You may also like

    AIG Life Insurance

    AIG Life Insurance

    AVIVA Life Insurance

    AVIVA Life Insurance
    To the top
    {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}