Microtakaful essentially has the same technical apparatus as Takaful insurance but it focusing on providing people at the base of the economic pyramid. Islamic microfinance and microtakaful exist to empower people to find a way out of poverty and give them a real hope of being financially self-sufficient.
The Potential for MicroTakaful – Levels of poverty in Muslim communities
On a global level, it should be noted that of the 41 lowest human development countries, 20 have a majority Muslim population and a further nine have a Muslim population over 20%. Of the one billion people living in the low developing countries, 54% are Muslims.
Microtakaful in practice
There are a few pioneering takaful operators that have entered into the low-income microtakaful market. Most notable are those providers in countries where almost all the population is Muslim, poverty is rife and the takaful sector is already established.
Prime Islamic Life of Bangladesh recently launched a group microtakaful product in addition to its existing three individual savings linked products. The product is unique in that it offers double the sum assured on death, contributes towards funeral costs and provides a monthly income to a nominee.
In Sudan, Shiekan Insurance and Reinsurance Co Ltd is working with the Central Bank of Sudan and the United Nations Development Plan (UNDP) to provide low-income farmers with affordable insurance coverage.
Amana Takaful of Sri Lanka has a partnership with Muslim Aid’s microfinance programme to provide affordable coverage for credit life, hospitalisation and medical charges. This is in addition to the companies’ death and disability cover for low-income earners with premiums as low as 0.20 USD per month.
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