As for chronic diseases, the percentage of people who have died is significant. The World Health Organization reported in 2002 that 71% of Malaysians from a total of 119,000 died of chronic diseases. The number showed a slight increase in 2014 where 74% of 146,000 people died due to chronic diseases.
As for the youth, education plays an imperative role in shaping a good life. Due to the the rising cost of living, students also suffer from a lack of pocket money. Those who are unable to apply for scholarships may apply to the National Higher Education Fund Corporation (PTPTN) to support their education expenses.
However, as of August 31, 2014, Second Education Minister Datuk Seri Idris Jusoh said there were 70,000 defaulters who were yet to come forward to pay off their loans. Factors that lead to delay in payment include high living costs and difficulty in accessing a job for fresh graduate students.
Other frightening challenges include soaring housing prices, an increase of 8% in the first quarter of 2014 from the previous year to RM 276,668, based on figures from the Valuation and Property Services Department (JPPH).
In short, these situations create an awareness of the need for an effective resolution for our life improvement. We cannot foresee the future but we can always work for a solution to invent it. Apparently, society is in need of financial security.
Can family takaful curb these problems? Family takaful consists of two types: individual takaful and group takaful. Individual takaful protects the individual participants and group takaful protects the individual and his/her family members Family takaful is a contract that protects individuals against financial losses resulting from death. If a person dies, apart from suffering emotional loss, the deceased's family would also suffer financial loss.
The role of takaful operators is to share the risk with the participants and give other participating members of the family takaful scheme an opportunity to share the risk and ease the other members' burden. This move to help each other shows solidarity among Muslims and human beings as a whole. It is clearly permissible in Islam and in line with the concept of taawun.
Allah says in Al-Maidah:5, "Help one another in righteousness and piety." Family takaful provides a long-term policy in nature, loosely comparable to conventional life insurance. Participants aim at saving for their long-term needs, for example their children’s education, their pension and compensation for dependents in the event of death and disability.
Family takaful is also different from life insurance as family takaful is in line with shariah rulings which is the core element for Muslims. Apparently, family takaful does not have the elements or riba, maysir and gharar. Theoretically, family takaful has sacred and moral values and is able to curb the problems mentioned above.
How does family takaful operate? Family takaful may be operated in mudharabah or wakalah contracts. Mudharabah contract or "profit-sharing" model is a profit-sharing contract, signed between the takaful operator as the entrepreneur (mudarib) who is entrusted to administer the takaful business, and the participants as the capital providers (sahibul mal).
The profit-sharing ratio is determined in a contract agreed by both parties. There are two types of mudharabah contracts: pure mudharabah and modified mudharabah. Pure mudharabah means the participants are entitled to 100% of the surplus while modified mudharabah means some of the surplus will be given to the takaful operator.
Basically, these two types of mudharabah contracts operate in the same manner. The participants (rabbul mal) will incur an amount of money to the takaful operator (sohibul mal). The takaful operator will divide the money into two classes, namely participant’s account (PA) and special participant’s account (SPA).
PA class is for the participant’s investment and savings while SPA class is for donation. As for PA class in both pure and modified takaful, the takaful operator will invest the money in a shariah-compliant investment. Any profits gained from the investment will be divided between the takaful operator and the participant within an agreed ratio.
Up to this point, the transaction in PA class is a practical and beneficial tool for parents to make a financial saving for their children, either for their educational purposes or other expenses like the purchase of houses or property. From Saad bin Abi Waqas, Rasulullah says: "It is better for you to leave your offspring wealthy than to leave them poor, asking others for help." However, there is a distinctive feature in the SPA class for pure mudharabah and modified mudharabah, which has caused debate among the jurists on the legality of mudharabah.
As earlier mentioned, the money allocated in SPA class is for donation purposes. This means the SPA class is the source of money to help needy people. It is also known as the tabarru fund. Up to this level of transaction, the SPA class can be viewed as practised as a cooperative transaction. One who contributes in this fund will gain a special reward from Allah.
From Safwan bin Salim, Rasulullah says: "The one who looks after and works for a widow and for a poor person (dependent), is like a warrior fighting for the cause of Allah, or like a person who fasts during the day and prays throughout the night." On another hadith, from Sahl bin Saad, Rasulullah says: "I and the person who looks after an orphan and provides for him, will be in paradise like this, putting his index and middle finger together."
In this hadith, Rasulullah also expounds on the great reward for a helpful person. Sometimes, the amount used by the injured member is lower than that which was allocated for him/her. This situation leads to an underwriting surplus.
The definition of underwriting surplus is lain down in Standard 13 of AAOIFI’s Accounting, Auditing and Governance Standard for Islamic Financial Institution: "Insurance or underwriting surplus is the excess of the total premium contributions paid by policyholders during the financial period over the total indemnities paid in respect of claims incurred during the period, net of reinsurance and after deducting expenses and changes in technical provisions." In a simple equation, underwriting surplus is: (Total contribution made by the participants) – (Total claims by injured party/ies + cost of retakaful + other technical expenses) = underwriting surplus In pure mudharabah model, the underwriting surplus will be given back to the participants.
However, for the modified mudharabah model, the underwriting surplus will be divided between the participants and the takaful operator, which is considered illegal by some jurists. This is because the only main source of income for takaful operators is the profit generated from the investment activities in PA and PSA classes.
Furthermore, the amount of distribution is ambiguous – some companies will divide the surplus between the takaful operator and the participants without any agreed ratio, and some will take wholly the underwriting surplus because it is regarded as their fee and profit. In addressing this concern in Malaysia, the Shariah Advisory Council of Bank Negara Malaysia (SAC) passed a resolution which allows the distribution of surplus between the participants and takaful operator within an agreed amount which can be regarded as the takaful operator fee.
As a conclusion for mudharabah contract on takaful, the crux of the family takaful model is, it is not a policy to secure one’s own life, but on the principles of mutual cooperation, to undertake a responsibility towards safeguarding widows, orphans and other dependents of the deceased (assured) from future financing risk. Risk here means a pure risk and not speculative risk. It must be noted that family insurance covers pure risk which is death. Death is certain. Only the occurrence of death is not certain.
The agent may be a full-time agent or a part-time agent. Upon collecting the customer, the agent must disseminate thorough information regarding the product of family takaful to avoid gharar and any misconception. Since the agent is the employee of the company, he/she is entitled to a salary. The agent’s salary will be deducted from the tabarru’ fund. In my humble opinion, I believe it is necessary for us to subscribe family takaful.
The demand for family takaful in Malaysia shows a steady growth from regular contributions product. Global Takaful Insights 2014 reported that Malaysia’s total net contribution of family takaful reached RM 4.5 billion from the past two years which was RM3.4 billion.
This indicates that Malaysians are aware of the importance of takaful. Let’s be a part of the group of people who have family takaful!
Article - by - Nurkamelia Ghazali is an undergraduate in Shariah and Law at Universiti Sains Islam Malaysia.
No comments:
Post a Comment