Insurance
remains one of the critical components in our modern society since it offers
coverage for our property. However, for many Muslims, a crucial question
arises: insurance; is it permissible by shari’ah? This article looks at the
Islamic perspective in the subject of insurances and the available halal
solutions for it, as well as a brief look into the controversy of the
conventional insurance and the sharia compliant insurance.
Understanding Islamic Insurance Principles
Standards that guide Islamic finance include the
following; Gharar which is uncertainty in a contract, maysir which is gambling
and lastly Riba which is interest. These principles determine the acceptability
of the different financial products such as insurance. The essential features
of conventional insurance contain gharar
and riba which constitute the question concerning its acceptability in light of
Shari’ah.
Takaful: The Halal Insurance
alternative could also be so called ‘Conventional Insurance Lite’.
Due to such concerns the idea of Takaful was
initiated. Takaful, a term derived from the Arabic word ‘kafala’ which loosely
translated means ‘to guaranteeing each other’. It is a insurance system that
has its basis on co-operative and conforms to the Islamic law. Many
participants make a deposit depending with the amount of risk destined in the
policy while those who have caused an accident or damaged property are
compensated from the fund. While on the other hand, like traditional insurance
it isn’t completely different because Takaful is somewhat like insurance where
people contribute their monies with mutual consent with an agreed intention
that the cash will help others whenever they encounter a disaster or mishap.
Key Differences: Takaful and Conventional
insurance
1.
Ownership of Funds: The main difference in Takaful is that the funds belong
to the participants while in the conventional insurance, the insurance company
holds the funds.
2. Risk Sharing:
Takaful means sharing of risks by the participants while in a conventional
insurance, there is shifting of risks by the participants to the insurer.
3. Investment Practices:
Takaful funds are channeled towards the Sharia compliant investments hence do
not invest in materials that are based on interest.
Islamic Rulings on Insurance
Alcohol is prohibited by the Islamic faith; however, there is a divergence in the stance of the scholars with regard to insurance. There are some who deemed all types of insurance as haram due to the element of uncertainty, and interest. Some, on the other hand, allow Takaful to be used as a permissible Islamic compliant funding mechanism.
Was it not Halal for a Muslim to take up life insurance?
Consumers are highly sensitive with the most
debate arising regarding the necessity of life insurance products. Whereas
there are scholars that perceived its characteristic as haram due to the
features of gambling and contingency some others opined that if formulated as
the Takaful product it would then be permissible.
Is Car Insurance Halal?
Auto insurance is regarded as mandatory in
most of the countries that have adopted it. Takaful-based car insurance gives
an Islamic compliant method by which the Shari’ah abiding populace can be in
harmony with the law of the land without violating the tenets of their faith.
Halal Financial Services: Increasing trend.
Halal financial services that include
insurance are emerging demands in the market. Most financial institutions
nowadays launch Shariah compliant services so that Muslims are also able to
obtain the corresponding services. These statistics can be explained by the
phenomenon of ethical and responsible finance.
The views of professionals and cases taken from
practice
According to Dr. Mohammad Hashim Kamali an
Islamic scholar Takaful is a form of Cooperative system which is based on the
principles of cooperation and 傳媒 and shared risk, therefore, is good to be adopted
as a substitute to the insurance system.
Take an example of a family in Malaysia that
chose to take the Takaful health insurance. This was welcomed by them having
the policy that they had an assurance that was in congruent with the Islamic
law and also that gave total insurance.
Conclusion
The question as to whether insurance is
permissible in Islam and, as such, halal could be answered in the negative and
might also be answered in the affirmative. Thus, despite certain difficulties
arising from an Islamic point of view in the sphere of conventional insurance,
Takaful can be considered as the effective answer. Through the knowledge of the
principles and analyzing the existence of halal ones, all the Muslims can make
the right decisions.
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It is always interesting to understand how
Muslims can protect their financial interests without violating the tenets of
their faith The paper on Islamic insurance and the Takaful model is therefore
useful as a guide in this regards. To sum up, various opportunities are
developing within the sector of halal financial services; therefore, it is
easier to manage their financial needs and follow the traditions of Islam.
