Is takaful only for Muslims? Can anyone subscribe takaful?

Have you been shopping around for insurance or takaful plans for a while now? You probably would have come across the term 'takaful', which is a financial planning and coverage that’s compatible with Islamic law.

Many seem to find its ethical principles compelling - Malaysia's takaful industry is thriving, growing at a sprightly pace compared to conventional insurance in the first nine months of 2022.

Despite its growing popularity among non-Muslims in Malaysia, a common misconception persists – is takaful only reserved for Muslims? Let's unravel this myth and explore the inclusivity of takaful beyond religious boundaries.

What is takaful?

It might be confusing due to the Arabic word, but contrary to popular belief, takaful is not exclusive to Muslims. It is a financial safety net accessible to individuals of all faiths.

Takaful welcomes everyone to participate in a system built on fairness and collective well-being. The system is based on Islamic Muamalat (Islamic transaction principles) prohibits three elements present in conventional insurance; Riba (interest), Al-maisir (gambling), and Gharar (uncertainty or probability).

Accessibility and benefits for non-Muslims

Shared risk for shared profits

In the spirit of Islamic principles, takaful operates on the foundation of mutual cooperation. Participants in a takaful plan pool their contributions based on the concept of “Tabarru’” (or donation) into a takaful fund administered by a takaful provider. This collective approach involves shared risk, where plan holders come together to provide mutual assistance and jointly guarantee each other against financial loss.

Distinctively adhering to Shariah principles that prohibit riba or interest, takaful operates on a risk-sharing model rather than an interest-based one. The funds within a takaful fund can be strategically invested in Shariah-compliant channels.

Unlike conventional insurance setups where profits benefit shareholders, takaful certificate owners maintain ownership stakes in the fund. Consequently, they share in the generated profits, fostering a sense of collective ownership.

Transparency

Takaful makes sure you know exactly what's happening with your protection plan. Right from the start, your provider will explain how things work, making sure you're in the loop about your contributions, how risks are shared, and where your money goes.

And it doesn't stop there – takaful keeps you updated on how your investments are doing. You get the lowdown on where your money is being used. This not only follows Islamic principles but also gives you the power to make smart choices about your financial protection.

No-claim benefit

Many takaful plans offer no-claim benefits, so, if you and your fellow certificate owners don't make any claims for a certain period, you get a little treat. This not only encourages responsible choices but also fits perfectly with takaful's philosophy of shared prosperity.

Addressing common concerns about takaful plans

Misunderstanding of takaful cost

One prevalent concern revolves around the perception that takaful might be costlier. However, it's essential to understand that takaful operates on the principles of risk-sharing and mutual cooperation. By pooling resources collectively, the cost per individual is significantly lowered, making takaful an affordable and equitable option.

Investment worries

Some may worry about limited investment options within takaful. Worry not! There’s a diverse range of Shariah-compliant products available, highlighting ethical investment avenues and sustainable financial practices.

Takaful offerings in Malaysia are broadly categorised into two types: general takaful and family takaful (similar to life insurance). General takaful shields certificate owners from losses arising from events like fires, accidents, property loss or damage, and liability to a third party.

On the other hand, family takaful products (widely known as takaful keluarga in Malaysia) are designed to provide financial protection to the participant's family in the event of death, critical illness, or total & permanent disability. Additionally, a portion of the contributions made towards family takaful serves the dual purpose of contributing to savings and supporting long-term objectives such as paying for education or debt.

Beyond this, other products available include personal accident, vehicle, medical, and critical illness plans.

Explore takaful plans today

Regardless of your beliefs, safeguarding your financial future is ultimately a universal need.

Takaful exemplifies inclusivity, embodying values that resonate with individuals from all walks of life. But whether you choose takaful or conventional insurance, the goal remains the same – to protect and secure what matters most.

Explore the possibilities, embrace inclusivity, and embark on a journey towards a financially resilient future with FWD’s Takaful plans. We offer multiple plans to suit your personal needs. Get a quote online today!