During my visit to Bandung recently, I was asked with a basic (for some) question on what actually takaful is all about. Let me share some points to those who is interested to know about it.
Takaful has been described by Takaful Act 1984 in Malaysia as a scheme which is based on mutual cooperation, solidarity and helping each other in financial aids in the event of mishap. The root of takaful is 'kafala' in Arabic which means guaranteeing, maintaining and preserving. This lead to the meaning of takaful as simply joint guaranteeing each other. It is a contract of agreement for mutual cooperation among the group who agree to jointly guarantee among themselves against loss or damage that may befall any of them. The main objective of the 'pact' for takaful is to pay for a defined loss from a defined fund.
