Principles
The principles of takaful are as follows:
- Policyholders cooperate among themselves for their common good.
- Every policyholder pays his subscription to help those who need assistance.
- Losses are divided and liabilities spread according to the community pooling system.
- Uncertainty is eliminated concerning subscription and compensation.
- It does not derive advantage at the cost of others.
Theoretically, takaful is perceived as cooperative or mutual insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits, but to uphold the principle of "bear ye one another's burden". Commercial insurance is strictly disallowed for Muslims (as agreed upon by most contemporary scholars) because it contains the following elements:
- Al-Gharar (uncertainty)
- Al-Maisir (gambling)
- Riba (usury)
There are three models (and several variations) of how takaful can be implemented:
- Mudharabah model (profit-sharing)
- Wakala model
- A combination of both
Read more about this topic: Takaful
Famous quotes containing the word principles:
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—Eugene V. Debs (1855–1926)
“All those who write either explicitly or by insinuation against the dignity, freedom, and immortality of the human soul, may so far forth be justly said to unhinge the principles of morality, and destroy the means of making men reasonably virtuous.”
—George Berkeley (1685–1753)