Conventional insurance and Islamic insurance

Insurance is an important financial institution in the modern economy. In some cases, it is more important than the bank. 

If someone's business or vehicle is damaged due to an accident or a business is destroyed for any reason. 

The insurance system cannot take effective measures to help the bank in the same way. 

The same is true of death. In case of disability or death of the head or main earner of the family in an accident, insurance can provide effective assistance to the family.

When the grief subsides and financial insolvency occurs. 

But insurance has created a lot of smoke in our society. Although many of us have a distinctive difference between conventional insurance and Islamic insurance (takaful), we often combine the two.

Apparently, the conventional interest-based insurance system seems to be an independent savings system to meet future needs. 

But there are five basic anti-Sharia elements that would be impossible for Muslims to take part in this insurance system without maintaining their faith. 

Therefore, Islamic Shariah experts have unanimously agreed that conventional traditional insurance is not acceptable in Muslim society.

5 Anti-Sharia elements in conventional insurance:

1. Al-Gharar (Unknown / Uncertainty): In the conventional insurance system, the insured completes the policy with the insurance company for a certain amount of money and deposits.

The money in several equal installments as a premium within a specified period. 

In this case, after paying a few premiums, if the insured suffers an accident or dies.

The insurance company pays the full amount to the insured or his nominee as per the policy agreement. But where and how this money was paid remains unknown to the insured. 

This element of ignorance or uncertainty exists in both conventional general insurance and life insurance. In Shariah terminology it is called Al-Gharar.

2. Al-Maisir (Gambling): Gambling or Al-Maisir originated due to the existence of Al-Ghaira in the field of life insurance. 

For example, when a policyholder of life insurance dies before the expiry of his term of insurance.

Even if the contract premium is paid in part, his nominee gets the full amount of the contract. In the eyes of Shariah, it is gambling.

3. Al-Riba (Interest): The jurists have unanimously ruled that interest-bearing transactions. 

Interest-based investments and other related transactions continue in the activities of conventional insurance companies.

Which are contrary to Shariah law and discipline.

4. Nomination of nominees against Shariah: Allah Almighty has identified the heirs of the deceased in Surah Al-Nisa and determined their rights. 

But in the conventional insurance system, the insured can nominate any person of his choice. 

Depriving all the heirs, this nominee will get the full amount of insurance which is a clear violation of Shariah. It is against Adal and Ihsan.

5. Existing Conditions for Payment of Premium: The existing Insurance Act (excluding life insurance) has a fixed term for the insurance policy to take effect. 

If even one installment is unpaid within that period, then the entire amount paid by the insured as premium till that time is deducted. 

For example, in the conventional general insurance system, it is mandatory to pay a premium of at least two years for the insurance to be effective. 

If an insured pays premium in quarterly installments, he has to pay a total of eight installments for two years. 

But if he fails to pay the remaining installment for any reason after depositing seven installments. 

Then the policy will not be considered valid and the concerned insured or his nominee will not get anything. That is, the insured's capital will be lost. It is the opposite of Adal and Ihsan.

But there is no objection in Islam to dealing with calamities and sudden calamities and to create a secure future for one's children. 

The Prophet Rasool E Kareem (peace and blessings of Allah be upon him) said: “It is better for you to leave your heirs wealthy, rich and affluent than to leave them destitute, dependent and dependent on other people. (Sahih Al-Bukhari)

He further said, "Whoever takes the initiative to solve the crisis of a distressed person, Allah Ta'ala will save him from the crisis in this world and in the Hereafter." (Muslim)

Islamic jurists and insurance experts have long been thinking, researching and reviewing various crises and problems

In order to meet the needs of the Muslim Ummah and find an alternative insurance system acceptable in Islam. In the end, they were able to invent an Islamic insurance system.

A number of international seminars have been held on Islamic Shariah-compliant insurance management. Of these, the conferences held in Damascus in 1961, Cairo in 1965, Morocco and Libya in 1975.

Morocco and Libya in 1975 and Mecca in 1976 are particularly noteworthy. 

Finally, at the OIC Summit in Makkah in 1980, a unanimous resolution was adopted to introduce Islamic insurance in the member countries. Note that the first Islamic insurance program was started in Bahrain. 

Therefore, separate laws have been enacted in that country. Then gradually Islamic insurance spread throughout the Middle East. Its activities in Africa first started in Sudan. 

In the Far East, Malaysia is ahead in this regard. Malaysia has enacted a separate law to promote Islamic insurance called the Takaful Act, 1984.

Islamic insurance has gained special fame under the name of Takaful. It is derived from the Arabic word kafala. 

Its lexical meaning is joint bail Or collective assurance, that is, mutual responsibility. In practical terms, takaful is a joint guarantee of a specific member group that guarantees the necessary cooperation in compensating members or members who have been injured in an accident or any other cause. 

The members of the group are bound by a joint guarantee agreement so that if any member is the victim of an accident or disaster, they can receive a certain amount of money for compensation. 

The fact is that the members of the group all come together at the same time according to a specific plan to help one of them in danger. 

The basis of Takaful system is brotherhood, solidarity and mutual cooperation. Therefore, Islamic Takaful i.e. Islamic insurance is a supportive and charitable organization and it is a group way to come forward with the help of a believing brother in times of need.