Introduction to Takaful and Its Islamic Foundations
What is Takaful? Takaful, derived from the Arabic word "kafālah," meaning mutual guarantee, is an Islamic insurance system based on the principles of cooperation, mutual responsibility, and shared risk. Unlike conventional insurance, Takaful adheres to Sharī’ah (Islamic law), making it a key component of the Islamic financial system. The Foundations of Takaful in Islam Islam emphasizes the concept of Mu‘āmalāt , which governs human interactions, especially in economic and social dealings. Central to this is the Sharī’ah, a comprehensive framework guiding ethical, moral, and financial practices. Sharī’ah principles mandate that Takaful operations avoid elements forbidden in Islam, such as: Ribā (usury): Earning interest is strictly prohibited. Gharār (uncertainty): Transactions must be free from excessive ambiguity. Maysir (gambling): Financial practices must not involve speculation or betting. By adhering to these principles, Takaful provides a transparent, et...