What is TAKAFUL?

What is TAKAFUL?

This is a form of Islamic insurance based on the Quranic principle of Ta'awon or mutual assistance. Takaful is a noun stemming from the Arabic verb "Kafal" meaning to take care of one's needs. Takaful means mutual help among the group i.e. each member of the group pools efforts to support the needy within the group. This is exactly like mutual insurance (cooperative insurance) as was practised in the early days of insurance and even today by certain groups. The concept of Takaful had already existed during the time of the Prophet where the Muslims contributed to a fund called Al-Kanz under the system of aqila. The contribution was for the purpose of helping members of their own community who were liable to pay diyat.

Diyat - Pre-Islamic Arab Custom of Blood -Money

In the pre-Islamic period, it was the custom of the pagan Arabs for a killer to have to pay Blood- Money (diyat) as compensation to the family of the slain. It was the right of the family of the deceased to demand compensation from the tribe or the family of the offender. The good thing about this custom is that it replaced blood-vengeance. Prior to this, the custom was blood called for blood. This led to terrible vengeance wreaked upon the killer or upon any member of his tribe. The duty of exacting vengeance (with the help of the tribe) lay upon the slain's next of kin. Although it is preferable to inflict the penalty on the person responsible for the death/injury, it may be inflicted on any member of his clan or tribe instead of on him. It is clear therefore that, ultimately, the responsibility both for the original act and for exacting vengeance is communal. This could either end the matter or start a blood feud in which the entire kin of both parties were involved.

Blood -money came into existence to curb tit-for-tat killings. It brought about conciliation between the parties at war by healing the wounds inflicted on each other. The matter would be settled on payment of compensation. The usual price to be paid was a hundred camels in the case of loss of life, one-third of that for a deep wound, five camels for the loss of a hand, an eye, or a tooth.When blood-money was paid in cash, it was 1,000 or sometimes 1,200 dinars (gold coins) which was generally spread over a period of three to four years. Although the payment of compensation was the personal responsibility of the killer, the whole tribe contributed towards the payment of the blood-money to the family of the slain so as to avoid bloodshed and destruction. Thus the whole tribe, in a way, offered protection to its individual members against a common danger. This system can be said to be a form of mutual insurance where the whole community contributes (to a common pool) to protect an individual member from financial ruin.

The system of blood-money was retained after the advent of Islam because of its virtue and benefits. The Holy Prophet was reported to have said "the virtues of the Jahiliyya (pagan Arab) are acted upon in Islam". In this connection, the Qur'an enjoined upon the believers not to waste human lives in retaliation but to let the law take its course and if the aggrieved party agreed, to a reasonable compensation, as brotherly love is better than retaliation. (Qur'an 4:92). It is also reported that the Holy Prophet (SAW) also fixed the amount of compensation for various injuries like five camels for bone-deep wounds or ten camels for the loss of every finger or toe. The compensation for death was 12,000 dinars (gold coins). The principle of compensation and group responsibility was reflected in the Covenant of Mutuality (under a system commonly called "Aqila") formed between the immigrants (Muhajirin) and the Medinans (Ansars) as soon as the Holy Messenger arrived in Medina. Through this covenant, all Muslims of Medina, irrespective of their tribe or clan, became one community. A fund was created known as "Al-Kanz" wherein members made yearly contributions. This fund helped to pay compensation on behalf of a member who was liable to pay diyat. There was another mutual system in existence known as "Qasamah". This was introduced to pay compensation in the event of death where the killer could not be identified. Umar, the second Caliph, widened this community when he ordered the preparation of registers (diwan) containing the names of Muslims in all parts of the Muslim state. The persons whose names were contained in those diwans owed one another mutual assistance and had to contribute to the payment of penalty for manslaughter committed by one of their community.

Can Muslim Engage in Risk Control?

It is a Muslim's belief that everything that happens in this world is by the will (Qadha and Qadar) of Allah. Similarly any accident or misfortune that befall us, that results in the loss of life or belongings, is by the will of Allah (swt). If that is the case, some people might ask, why should there be Takaful? Should we then not leave it to Allah and accept whatever accident, misfortune or catastrophe that befall us? Whilst it is true that we should accept whatever "misfortune" that befall us, we are also taught to avoid or reduce the possibility of these "misfortunes" by taking positive steps.

One day the Prophet (s.a.w.) saw a bedouin leaving a camel and he asked the bedouin, "why don't you tie down you camel?" The Bedouin answered, "I put my trust in Allah." The Prophet said, "Tie your camel first, then put your trust in Allah." What the Prophet (s.a.w.) has done here is teaching the bedouin to reduce the risk of losing his camel. Similarly in many actions of the Prophet (s.a.w.), we saw that he took steps to reduce risks although he could have done otherwise if he wanted to.

For example, during the Hijrah, he went to hide in the cave first instead of going straight to Madinah. He commanded the companions to migrate to Madinah by batches instead of in one big group. Again this is to reduce risks. When he went to war, he put on his armour instead of wearing light clothes.

In this modern world, one of the ways that can be done to reduce the risk of loss due to accident or misfortune is through insurance. In fact it is almost impossible to live without being affected by insurance. The house that we buy or rent has got insurance cover. The car that we buy or rent has to have insurance. The bus that we board has insurance. Insurance is all around us whether we like it or not.