In the world of financial protection, the choice between takaful and conventional insurance carries significant implications. Let’s break down the key differences to help you make an informed decision.
1. Concept
Insurance: A financial agreement where individuals or businesses become policyholders by paying a premium to an insurance provider in exchange for protection against a specified risk.
Takaful: An arrangement where a group of participants mutually guarantee each other against a specified risk, whereas the takaful provider plays the role of managing the common fund. It is considered as the Islamic alternative to insurance.
2. Payments
Insurance: By paying premiums, policyholders obtain coverage and transfer the financial risk of potential losses to the insurance provider.
Takaful: Participants cooperate by contributing to a common fund and share the responsibility of covering the loss endured by a participant from the pooled funds.
3. Risk and Reward Sharing
Insurance: The insurance provider assumes to bear the risk of covering the losses of the policyholder. Hence, any surplus generated from the premiums paid belongs to the insurance provider.
Takaful: Monies in the common fund belongs to participants as per their contributions. Hence, any surplus generated from the common fund shall be distributed amongst them and the takaful provider based on agreed-upon ratios.
4. Principles
Insurance: Currently practiced in the conventional financial system. It provides a mechanism to mitigate financial uncertainties through risk transferring.
Takaful: Operates in accordance with Islamic finance principles by avoiding interest-based transactions that are free from unIslamic concepts like uncertainty (gharar) and gambling (maysir).
Introducing Be U Microtakaful!
Rooted in the principles of Takaful, which align with Islamic finance, Microtakaful aims to provide accessible and affordable coverage to individuals with limited financial resources. With Microtakaful, our Be U users can apply for coverage regardless of their side hustles. Starting from as low as RM0.80, they can choose their tenure from daily to monthly options. It is applicable to all gig jobs from any platform in Malaysia.
Disclaimer: The information presented above is for educational and informational purposes only and it should not be considered as personalized financial planning services. It is not intended as financial, legal, accounting, tax, or any other advisory guidance. Prior to making any financial or other decisions, you must obtain your own independent advice tailored to your individual circumstances.
As part of your decision-making process, you are advised to read the applicable Terms and Conditions (T&C), Product Disclosure Statement (PDS) and Frequently Asked Questions (FAQ) to make informed decisions before subscribing and/or participating in any Be U products.
