Concept is based on solidarity, shared responsibility & brotherhood among participants.
Participants all agree to cooperate and be mutually responsible to help one another financially should a member suffer a loss defined in the takaful contract.
This is achieved through donation ("tabarru") to a common fund from which financial compensation can be paid to eligible participants;
Section 2 of the Takaful Act 1984 defines:
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“Takaful” as a scheme based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for that purpose;
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"Takaful business” as business of Takaful whose aims and operations do not involve any element which is not approved by the Shariah.
