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CHAPTER 6: INSURANCE PLANNING (USEFUL INFORMATION WHEN BUYING AN INSURANCE…
CHAPTER 6: INSURANCE PLANNING
General functions of insurance
Assistance in economics survival
A basis for credit, indemnification in case of losses, solutions to social problems and a means of increasing our ability to use our assets.
To provide us with peace of mind
also serves society by stimulating savings and providing an investment capital.
TYPES OF CONVENTIONAL INSURANCE
Life Insurance
an insurance coverage that pays out a certain amount of money to the insured/policyholder or his specified beneficiaries upon a certain event such as the death of the individual who is insured.
General Insurance
it insures us against losses and damages other than those offered by life insurance. The coverage period is usually 1 year which normally requires a one-time premium payment.
ISLAMIC INSURANCE/TAKAFUL
Takaful is a protection plan based on Syariah principles. Takkaful simply means joint guarantee. A takaful contract is based on the principle of utmost good faith (trust), whereby you need to disclose all information required.
General Takaful
protection on short term basis, generally covering a period of one year. Provides protection for any loss or damage that may inflict properties. The risks covered are property loss or damage, accidental death or injury to 3rd party.
Family Takaful
is a combination of protection and long-term savings, usually covering a period of more than one year. Provides financial benefits if the policyholder is inflicted by tragedy, as well as investment profits. The risks covered are, premature death, permanent disability.
USEFUL INFORMATION WHEN BUYING AN INSURANCE POLICY
To ensure that the amount of coverage taken is adequate and suits your needs.
To ensure that all material facts are fully disclosed.
To ensure that the premium or contribution payable is affordable.
To monitor the period of coverage and time for payment of premium or contribution.
To understand the policy or plan including product features, conditions, benefits limitations and exclusions.
DIFFERENCES BETWEEN TAKAFUL AND CONVENTIONAL INSURANCE
Takaful
Conventional Insurance
An exchange contract (sale and purchase) between insurer and insured.
Abundant with 'riba', 'gharar', and 'maisir'.
No Syariah Advisory Council (SAC).
Interest practice and policyholder pays premium to the insurer.
Based on mutual co-operation and 'Tabarru'
Free from 'riba', 'gharar', and 'maisir'
Syariah Advisory Council (SAC)
Profit will be shared among operator(company) and participant on Mudharabah basis or Performance Investment Fee.