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Encyclopedia of Islamic Insurance, Takaful and Retakaful

Mohd M. Billah, Ezzedine GhlamAllah and Christos Alexakis

The model of Islamic insurance policy is based on the principles of mutual cooperation, brotherhood and solidarity. This timely volume contradicts the widely-held belief that insurance policies oppose the teachings of Islam, exploring ways in which it coheres with Shari’ah law. The book explores Takaful, an insurance paradigm that is in accordance with Islamic principles and suits the needs of modern Islamic economies and communities.
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Chapter 5: Family Takaful (Islamic life insurance)

Mohd M. Billah, Ezzedine GhlamAllah and Christos Alexakis


The central idea of life insurance contravenes the Shari’ah spirit. Thus, an attempt is made here to come up with an insurance paradigm justified by the Shari’ah principles that may suit the contemporary global Islamic economy. A life insurance policy is a financial transaction undertaking a responsibility towards protecting people against possible future unexpected financial risk. The conventional system of life insurance policies is not recognized by Islamic teaching, which is why many Muslims and even Muslim Scholars oppose the idea of life insurance practiced in the conventional economy. Hence, the central idea of the model of Islamic life insurance is that it is not a policy to insure one’s life, but is a financial transaction relying on the principle of mutual cooperation to undertake the responsibility of safeguarding the dependents of a deceased from financial risks. Such a model of Islamic life policy may not involve unlawful elements like Riba but it may operate on the basis of al-Mudharabah financing technique.

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