Principles of Takaful Company Based on Shari’ah
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Questions and Answers

What is a key difference between Takaful and conventional insurance in terms of profit?

  • Profits in Takaful are entirely reinvested, while in conventional insurance they are distributed as dividends.
  • Profits in Takaful are shared among all participants, while in conventional insurance they go to the management company.
  • Profits in Takaful are for policyholders, while in conventional insurance they are for shareholders.
  • Profits in Takaful are for shareholders, while in conventional insurance they are for policyholders. (correct)
  • What type of investments are typically allowed in both Takaful and conventional insurance?

  • Equity and debt with no restrictions (correct)
  • Equity and debt with restrictions
  • Debt only
  • Equity only
  • In which model does the operator share in the surplus generated?

  • Mudarabah Model- Operator Sharing in Surplus (correct)
  • Investment Profits in Takaful
  • Non-Surplus Sharing Mudarabah Model
  • Expense Handling in Takaful Models
  • Which model does not involve sharing the surplus generated with the operator?

    <p>Non-Surplus Sharing Mudarabah Model</p> Signup and view all the answers

    What is a characteristic of General/Group Takaful under One Year Plans?

    <p>Short-term coverage</p> Signup and view all the answers

    According to Mudarabah principles, who may share in the original capital provided?

    <p>Only the Sahib al Mal (Capital Provider)</p> Signup and view all the answers

    In Bank al-Jazira Wakala Model, who is totally responsible for all start-up expenses and operational costs?

    <p>Operator</p> Signup and view all the answers

    What is the key feature of the Bank al-Jazira Wakala Model regarding fees?

    <p>Fees only taken if a product is sold</p> Signup and view all the answers

    How does Jordan Islamic Insurance handle fixed expense fees for one-year contracts?

    <p>Reimburses participants if expenses are less than fixed fee</p> Signup and view all the answers

    What is a distinguishing characteristic of Takaful models involving Group Takaful-One Year Plans?

    <p>Total transparency on all aspects of operations and fee structure</p> Signup and view all the answers

    What is the main principle guiding Takaful companies in their operations?

    <p>Conforming to Islamic norms</p> Signup and view all the answers

    According to Islamic economic principles, what should be the objective of a Takaful company?

    <p>Promote the interests of all stakeholders</p> Signup and view all the answers

    In the Mudarabah model for Takaful, what is the key feature of the operator sharing in surplus?

    <p>Sharing the surplus equitably with all stakeholders</p> Signup and view all the answers

    What distinguishes the Non-Surplus Sharing Mudarabah model in Takaful?

    <p>Not sharing any profits with stakeholders</p> Signup and view all the answers

    In General/Group Takaful for one-year plans, how are decisions typically made regarding corporate matters?

    <p>All stakeholders have a right to participate in corporate decisions</p> Signup and view all the answers

    Which Takaful model does not involve charging expenses to the participants' pool?

    <p>Mudarabah</p> Signup and view all the answers

    What is a key advantage of the Non-Surplus Sharing Mudarabah Model over a Mutual insurance model?

    <p>Does not charge expenses to participants' funds</p> Signup and view all the answers

    In a Family/Individual Life Takaful operation, why is the Non-Surplus Sharing Mudarabah Model considered a difficult business model?

    <p>Relies on build-up of reserves and savings funds</p> Signup and view all the answers

    What is a characteristic of the Family/Individual Life Takaful operation under the Non-Surplus Sharing Mudarabah Model?

    <p>Relies on build-up of reserves and savings funds</p> Signup and view all the answers

    Which Takaful model involves sharing 100% of the surplus with the participants and not with the operator?

    <p>Family (individual) Takaful</p> Signup and view all the answers

    What is the main principle of Takaful models in terms of expense handling?

    <p>Operators and participants share expenses equally</p> Signup and view all the answers

    In a Mudarabah Model of Takaful, how are investment profits typically shared?

    <p>Investment profits are shared between the Participants and the Operator based on a pre-determined ratio</p> Signup and view all the answers

    What distinguishes the Non-Surplus Sharing Mudarabah Model in Takaful?

    <p>No profits are distributed to the Participants</p> Signup and view all the answers

    In General/Group Takaful with One Year Plans, how are risks typically managed?

    <p>Risks are borne entirely by the Participants</p> Signup and view all the answers

    What is one of the key features of Cooperative Risk-sharing in Takaful models?

    <p>Clear segregation between Participant and Operator for risk-sharing</p> Signup and view all the answers

    What is the primary concern when applying a Mudarabah contract in a Takaful underwriting operation?

    <p>Sharing investment profits</p> Signup and view all the answers

    How does surplus differ from profit concerning a Mudarabah contract in Takaful operations?

    <p>Surplus is after deducting claims and direct expenses, while profit is generated from investment dealings.</p> Signup and view all the answers

    Why do Sharia scholars debate applying a Mudarabah contract to Takaful underwriting operations?

    <p>Because profit is not generated in underwriting operations</p> Signup and view all the answers

    In a Mudarabah Surplus Sharing Model, what remains after deducting claims and direct expenses?

    <p>Takaful underwriting surplus</p> Signup and view all the answers

    How do different Takaful models treat expenses according to the text?

    <p>Handle expenses differently</p> Signup and view all the answers

    What element is forgiven in Islamic finance, using charitable donation as an alternative?

    <p>Al Gharar (uncertainty)</p> Signup and view all the answers

    According to the Fiqh Academy Resolution 1985, what type of contract is considered prohibited (Haram) according to Sharia?

    <p>Commercial Insurance contract</p> Signup and view all the answers

    What contract is deemed as the alternative and Sharia-compliant option for commercial insurance in Islamic finance?

    <p>Cooperative Insurance contract</p> Signup and view all the answers

    What did the Fiqh Academy Resolution 1985 not specify regarding Takaful operations?

    <p>The Mudarabah model for Takaful</p> Signup and view all the answers

    Which element of Islamic law leads to variations in Takaful models?

    <p>Pluralism of Fatwas</p> Signup and view all the answers

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