Takaful is an Islamic insurance concept which is grounded in Islamic transactions (Islamic banking), observing the rules and regulations of Islamic law. This concept has been practiced in various forms since 622 CE.[1] Muslim jurists acknowledge that the basis of shared responsibility (in the system of Aquila as practiced between Muslims of Mecca and Medina) laid the foundation of mutual insurance.




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.



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