Takaful

AAA

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.

INVESTOPEDIA EXPLAINS 'Takaful'

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.

RELATED TERMS
  1. Islamic Financial Services Board ...

    An international organization that issues guiding principles ...
  2. Usury

    The act of lending money at an interest rate that is considered ...
  3. Pooling Of Interests

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

    The chance that an investment's actual return will be different ...
  5. Islamic Banking

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

    The process of changing a firm's business structure so the owners ...
Related Articles
  1. Understanding Your Insurance Contract
    Insurance

    Understanding Your Insurance Contract

  2. Exploring Advanced Insurance Contract ...
    Home & Auto

    Exploring Advanced Insurance Contract ...

  3. Working With Islamic Finance
    Retirement

    Working With Islamic Finance

  4. What is an Islamic investment policy?
    Investing

    What is an Islamic investment policy?

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center