MCQ Detailed View

The term Takaful originates from the Arabic root word Kafala, which means “guaranteeing each other” or “mutual responsibility.” In Islamic finance, Takaful refers to a cooperative system of insurance that is compliant with Shariah principles. Unlike conventional insurance, which may involve elements prohibited in Islam such as riba (interest), gharar (excessive uncertainty), and maysir (gambling), Takaful operates on the basis of mutual assistance, shared responsibility, and solidarity among participants.

Under Takaful, members contribute to a pooled fund, which is then used to support any participant who suffers a defined loss. The contributions are considered as tabarru’ (donations) rather than premiums, ensuring compliance with Islamic ethics. The concept is supported by Qur’anic injunctions that promote cooperation in righteousness (Surah Al-Ma’idah 5:2).

The root word Kafala emphasizes the idea that participants are not merely buying protection for themselves but are jointly guaranteeing and supporting one another in times of need. This mutual guarantee is a cornerstone of the Takaful model and reflects the Islamic principle of social solidarity.

Key Facts:

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  Takaful comes from the Arabic root Kafala, meaning mutual guarantee.

  
  


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  Based on Islamic principles of cooperation, solidarity, and shared responsibility.

  
  


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  Operates without riba (interest), gharar (uncertainty), and maysir (gambling).

  
  


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  Contributions are given as tabarru’ (donations) to a common fund.

  
  


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  Rooted in the Qur’anic concept of helping one another in righteousness (Surah Al-Ma’idah 5:2).

  
  


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  Commonly used in Islamic insurance and financial protection systems.