The concept of insurance is not haram in Islam when undertaken in the framework of Takaful or mutual cooperation and solidarity. Contrary to conventional insurance, Takaful does not consist of non-permissible elements such as gharar (uncertainty), gambling and investing in interest-bearing instruments. Islam encourages mutual cooperation as Allah says in the Quran :

” وتعاونوا على البر و التقوى ” سورة المائدة.”

“ And help you one another in righteousness and piety “

Surah Al Maidah 5:2

Takaful is a type of Islamic insurance wherein members contribute money into a pool system to guarantee each other against loss or damage. Takaful-branded insurance is based on Shariah or Islamic religious law, which explains how individuals are responsible to cooperate and protect one another. Takaful policies cover health, life, and general insurance needs.

Takaful insurance companies were introduced as an alternative to those in the commercial insurance industry, which are believed to go against Islamic restrictions on riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles—all of which are outlawed in Shariah.

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