Sharia Insurance Fund Management Mechanism

Sharia insurance or also known as Takaful is an initiative to protect each various others and help each various others amongst several individuals/celebrations through financial investments in the form of possessions that provide a pattern of going back to face certain dangers through sharia-compliant agreements.

Sharia insurance uses the concept of risk sharing, where the risk of one party is birthed by all celebrations that are policyholders, while conventional insurance uses a danger move system where the policyholder is moved to the insurance company.

Premium management in conventional insurance is often unjust to policyholders, and insurance companies often benefit. The company takes advantage of the possession of the costs paid as well as the excess and financial investment.

The management of funds in financial investments with usury is also an unjust practice in conventional insurance. The following is a description of the aspects of usury included in the conventional insurance functional system.

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1. This is because the costs received from insurance companies are purchased items containing usury, which is restricted by sharia.

2. The trade-in between the premium paid and the amount guaranteed falls under the category of usury fadl, that's, the usury of trading comparable products with an unequal quantity because there's most likely to be a discrepancy between the premium paid by the individual and the quantity of the amount guaranteed paid by the insurance company.

The arrangement of a shed or forfeited funds for individuals that don't proceed to pay costs throughout the contract force insurance or resignation. This is an outcome of the move of possession of funds from individuals to companies by conventional insurance methods. All these just benefit the insurance company.

The system of money management in sharia insurance is very various from conventional insurance. In sharia insurance, insurance individuals are the team that has the whole premium money (shahibul maal), and the insurance company acts as a guardian (mudharib) to manage the financial investment proceeds insurance money which will after that be split between the insurance company and the insurance individual with the circulation of revenues based upon the concurred profit sharing (proportion).

This system is shut to the aspect of justice that's highly advertised in the sharia system. The system for money management in sharia insurance is split right into 2, specifically the system for items that contain aspects of savings and the system for items that don't include aspects of savings.

It can be said that the role of sharia insurance is to manage the procedures and financial investments of components of the funds received from policyholders. As opposed to conventional insurance which acts as a danger insurance provider. The contract used in sharia insurance uses the concept of helpful between other policyholders and sharia insurance companies, while the contract used in conventional insurance is based upon the concept of trade (buying and selling buying and selling).

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