Takaful
تكافل
Pronunciation: tah-KAH-ful
Islamic cooperative insurance based on mutual assistance and shared risk among participants.
Definition
Islamic cooperative insurance. Participants contribute to a shared pool (fund) that provides mutual financial protection against loss or damage. Based on principles of cooperation (ta'awun), shared responsibility, and mutual benefit — unlike conventional insurance's transfer-of-risk model.
Key differences from conventional insurance: (1) contributions are treated as donations (tabarru') to the common pool; (2) the fund is owned by participants, not the company; (3) surplus is returned to participants or donated to charity; (4) investments are Shariah-compliant. Takaful models include Mudarabah-based (the operator manages the fund for a profit share) and Wakalah-based (the operator manages the fund for a fixed fee).
Related Terms
Tabarru'تبرع
A voluntary contribution or donation — the foundation of Takaful (Islamic insurance) pooling.
Ghararغرر
Excessive uncertainty or ambiguity in a contract — one of the three major prohibitions in Islamic finance.
Maysirميسر
Gambling or games of chance — one of the three major prohibitions in Islamic finance.
Wakalahوكالة
An agency contract where one party appoints another to act on their behalf for a fee.
Further Reading
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Quick Answer
Takaful (تكافل) — Islamic cooperative insurance based on mutual assistance and shared risk among participants. Islamic cooperative insurance. Participants contribute to a shared pool (fund) that provides mutual financial protection against loss or damage.
Key Takeaways
- Islamic cooperative insurance based on mutual assistance and shared risk among participants.
- Category: Insurance
- Related: Tabarru', Gharar, Maysir, Wakalah
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Last reviewed: 2026-03-06
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