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takaful

Takaful is the concept for the sharing of risks based upon Islamic laws.

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takaful

Takaful is the concept for the sharing of risks based upon Islamic laws.

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Structured much like mutual insurance, takaful allows participants to pool their exposures to loss by each paying in a specific sum to assist each other in the time of need. The members essentially guarantee each other, with the losses being spread across all participants. A requirement of a takaful cooperative is that it may not invest its funds in any companies viewed to be involved in activities prohibited by Islamic law. For example, investment is forbidden in organizations having any dealings with tobacco, pork, alcohol, entertainment, or gambling. And since the traditional insurance product is considered to have elements of gambling, uncertainty, and interest, investment in a traditional insurer is barred.