- Participants contribute a sum of money into a common fund, which will be used to mutually assist the members against a defined loss or damage.
- A takaful operator is entrusted to manage the fund, who runs the operation commercially as a business venture for profit. Sources of income for the operator are from:-
- profit from the investment of its shareholders’ Fund
- agency/wakallah fee;
- share of investment profit of takaful funds;
- surplus of the takaful funds.
Tabarru'
- Tabarru’ means donation, gift or contribution. Participant in a takaful scheme agrees to relinquish, as a donation, a certain proportion of the contribution into a takaful fund to assist other participants faced with difficulties.
- It embraces the elements of shared responsibility, joint indemnity and mutual protection .
- It is the core of the takaful system that makes the uncertainty element allowable under the takaful contract .
OPERATIONAL MODELS
The takaful operator is the administrator of the fund and manages the fund in trust on behalf of the participants. The contract between the participants and the operator can be a contract of mudharabah (profit-sharing) or wakalah (agency) .