Takaful has always been practiced in one form or another throughout the history of Islam. The word takaful is derived from the Arabic verb Kafala, which means to take care of one's needs.
When you participate in a takaful plan, you take up a takaful certificate. This essentially means you pool some of your money with that of others, and it’s managed on your behalf by a takaful operator. Then, should you suffer a loss, as long as it’s covered in your plan, you’ll receive a claims payment (a takaful benefit) from the fund – known as a Tabarru fund. Think of it as a co-operative, based on the Islamic principles of solidarity, risk sharing and brotherhood. Like insurance, it means losses are divided and liabilities are spread.