Family Takaful (Islamic life insurance)

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.