A Conceptual Understanding and Significance of Takaful (Islamic Insurance): History, Concept, Models and Products

• Ilhamiddin Ikramovich Nazarov

  International Islamic University Malaysia

  Author

• Naeem Suleman Dhiraj

  International Islamic University Malaysia

  https://orcid.org/0000-0003-0832-1813 (unauthenticated)

  Author

Human beings are naturally inclined towards safeguarding and protecting themselves from future misfortunes. This natural tendency of risk mitigation has given rise to the concept of insurance which existed thousands of years ago and was fervently practiced by many ancient tribes. Over time, the concept of insurance has changed since it is now being commercialized and have been transformed into a profit-oriented business. To revive the legacy of the real concept of insurance, the takāful (Islamic insurance) scheme was introduced in the second half of the 20th century differentiating itself from conventional insurance practices. The takāful scheme is strictly based on Islamic law known as Shari'ah. This paper thus expounds on the concept of takāful assimilating a holistic overview of this emerging industry while sorting the differences between the takāful scheme and the conventional insurance mechanisms. It concludes that the takāful (Islamic insurance) scheme is a robustly viable and sustainable alternative to conventional insurance.

1. Ilhamiddin Ikramovich Nazarov, International Islamic University Malaysia

   Postgraduate student of Islamic Banking and Finance

2. Naeem Suleman Dhiraj, International Islamic University Malaysia

   Postgraduate student of Islamic Banking and Finance

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