RTS Pakistan

TAKAFUL – Islamic Insurance

Takaful – Islamic Insurance is originated from Arabic word Kafalab. It means “joint guarantee”. This is a cooperative scheme where participants pay donations (a premium), which is also called Tabarru, in a common pool. In return, this donation is used to compensate valid claim.

RE-TAKAFUL – Reinsurance

Re-takaful or Reinsurance operates at only regional and national markets, according to ISRA. It is form of mutual assistance among participating. Takaful operators pay a certain amount of contribution into the Re-Takaful fund. The purpose of Re-Takaful or Reinsurance is to share certain defined risk in a specific category.

Re-Takaful is an Islamic alternative based on a Shariah to conventional reinsurance. It provides assurance by Re-Takaful or Reinsurance operators to Takaful operators for providing securities in return of an agreed donation (premium).


All Takaful participants pays different amount of donation (premium) depending upon different degree of risk association. Takaful can be used to cover below mentioned risks:

  • Life coverage
  • Health Coverage
  • Accident Coverage
  • Immovable Properties
  • Movable Properties
  • Commodities
  • Valuables
  • Transportation

Difference between Takaful and Conventional Insurance

To manage risk and uncertainty, Insurance is most common tool in conventional financial market. In Islamic economic system, Takaful is the alternate of insurance.

Insurance is two-sided (commutative) contract operated by business institutions. Takaful is one-sided (non-commutative) where the risk is collectively shared by group of voluntarily operated by co-operative institutions.

Insurance coverage is based on risk taking and speculation. Takaful coverage is based upon risk sharing through gift, donations or / and give away.

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