What are the attractions of
takaful compared to conventional insurance to the non-Muslim potential
customers?
To a
Muslim, Takaful is the only choice for him to obtain any coverage or related
benefits. It is like being given two options
to generate funds to protect any potential future loss. First option is to participate in a gambling
activity at a casino with the hope that he will win huge amount of money to
safeguard his future potential loss.
Secondly, he may form a group of people where all members agreed to
contribute certain amount of money into a charity fund to be used for those who
suffer any loss in future. Obviously,
second option is the only choice for a Muslim to ensure full compliant to Shariah principles. Therefore, Takaful fulfils the Shariah
requirements for the Muslim.
For
non-Muslims, they will definitely search for any unique differentiation
beneficial to them. Besides the normal
common benefits and features which are available in insurance and takaful,
there are few attractive features in takaful which definitely enhance the
products.
Firstly,
the participant is given a clear knowledge on the cash flow management of his
contribution from inception till claim, surrender or maturity. Takaful operator will share their business
model which usually incorporated in all their marketing collaterals explaining
the details on the charges and fees, separation of funds, investment profits as
well as surplus distribution management.
Thus, the potential customers will be more confident and convinced to involve
in takaful business due to its
transparency.
Secondly,
takaful provides a higher opportunity for surplus sharing among the
participants. Theoretically, all surplus
belongs to the takaful fund which is owned by all the in-forced
participants. If the fund experiences a
lower claim pay out than expected, it will lead to a generation of surplus
which can be distributed to all the participants accordingly. .Nevertheless, as an incentive to the
operator for managing the fund effectively, a small percentage of the surplus
may be shared with the operator. Despite
of sharing with operator, participants still entitle a handsome amount of money
for such situation. This surplus sharing system is not available under the
conventional insurance.
Thirdly,
all takaful products provide some cash surrender values (CSV) irrespective of the
duration in-forced. This feature is
compelling particularly in the family takaful products where most life
insurance products will be forfeited in the event of surrender happens within
the first three years of policy in-forced.
The CSV resides in participant’s personal account namely the PIF thus
the accumulated amount is a guaranteed amount belongs to the participant.
Last
but not least, takaful business must be supervised by a Shariah committee who
ensure that all the Shariah principles are followed and the interest of public
at large are protected. Therefore,
maximizing the shareholders’ value, which is the normal corporate objective of
insurance, is not the ultimate goal of takaful business. All participants under takaful can be rest
assured that their interest is well taken care by the Shariah committee.
