DEFINITION of 'Takaful'

A type of Islamic insurance, where members contribute money into a pooling system in order to guarantee each other against loss or damage. Takaful-branded insurance is based on Sharia, Islamic religious law, and explains how it is the responsibility of individuals to cooperate and protect each other.


Takaful insurance companies were introduced as an alternative to commercial insurance companies, which go against the riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles, that are outlawed in Sharia.

  1. Pooling Of Interests

    A method of accounting that allows the balance sheets of two ...
  2. Risk

    The chance that an investment's actual return will be different ...
  3. Usury

    The act of lending money at an interest rate that is considered ...
  4. Mutualization

    The process of changing a firm's business structure so the owners ...
  5. Islamic Banking

    A banking system that is based on the principles of Islamic law ...
  6. Financial Cooperative

    A financial institution that is owned and operated by its members. ...
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