Glossary
Takaful
تكافلDefinition
Islamic cooperative insurance — participants contribute to a mutual pool from which claims are paid, with surpluses returned.
Takaful avoids the riba, gharar, and maysir concerns scholars raise about conventional insurance by structuring the arrangement as mutual donation (tabarru') rather than a contract of exchange.
Operators run the pool under wakala or mudaraba arrangements and earn a fee or share of investment returns rather than underwriting profits.