Family Takaful FAQ


Takaful is an insurance concept which is grounded in Islamic Muamalat, observing the rules and regulations of Shariah. It is a concept that has been in practice for over 1,400 years.

In principle, Takaful system is based on mutual co-operation, responsibility, assurance, protection, and assistance between groups of participants. In other words, it is the provision of shared contributions to help those who are in need.


  • Subject to Islamic Financial Services Act (IFSA) 2013

  • Participant makes contribution based on Tabarru’ (Donation) concept

  • Takaful Operator is the Fund Manager

  • Participation in a Takaful plan is based on contract of mutual assistance amongst participants

  • Shariah Committee is formed to ensure that the Takaful Operator’s transaction is done in accordance with the Shariah Principle

  • No elements of maisir (gambling) and riba’ (interest). Note: gharar (uncertainty) exists in Takaful but tolerable under Tabarru’ (Donation) contract


  • Subject to Financial Services Act (FSA) 2013

  • Policyholder pays premium for the protection amount

  • Insurance Company is the Risk Owner

  • Insurance is a contract of buy and sell between the Insurance Company and Policyholder

  • No need for formation of Shariah Committee

  • Existence of Gharar(uncertainty), Maisir (gambling) and Riba' (interest)

Takaful is an Islamic insurance concept which adheres to ethics and transparency of Shariah guidelines that prohibit uncertainty (Gharar), gambling (Maisir) and interest (Riba). The word Takaful is derived from the Arabic verb Kafala, which means to guarantee, to help or to take care of one's needs.

Each participant contributes on the basis of iltizam bi al tabarru' (donation) into a fund that will be used to support each other in times of need.

Tabarru’ (Donation)

In Takaful business, Tabarru' is a donation for the purpose of mutual protection among the participants. Tabarru' is credited from the Participant's Investment Fund (PIF) to the Participant's Risk Fund (PRF) which will be used to help other participants in the event of any misfortune.


Wakalah (agency) contract in Takaful business refers to a contract established between the Participant and Takaful Operator where the Certificate Owner appoints the Takaful Operator as a wakeel (agent) to manage the Takaful funds on behalf of the Participant in accordance with the Shariah principles.

The main tasks of Takaful Operators that are appointed the wakalah contract will be to manage the Participant's Risk Fund (PRF) and also invest the Participant's Investment Fund (PIF) based on the investment contract either mudharabah, wakalah bi a istihtmar, etc.


Ta’awun means corporation or solidarity (based on the spirit of brotherhood, righteousness, and piety). In Takaful context, ta'awun is referred to as mutual help and indemnity where the participants are committed to making donations with the intention to help each other against any defined perils within the Takaful scheme.

  • Takaful is a mutual guarantee provided by a group of participants against a defined risk or catastrophe befalling a person (financial protection in the event of death, disability or illnesses), property or any form of valuable things.


The tabarru' which is credited from the Participant’s Investment Fund (PIF) to the Participant's Risk Fund (PRF) will be used to help participants in the event of any misfortune.

Investment Profit

Payment of the contribution shall be allocated to the Participant’s Investment Fund (PIF) after deducting the wakalah fee. The Takaful Operator will manage and invest the allocated contribution in shariah-compliant securities. The profits from the investment performance will retain certain percentage based on different investment contracts for the benefit of the participants.


If there is net surplus in the Partipant’s Risk Fund (PRF) at the end of the financial year, it shall be distributed to the participants and the Takaful Operator in the agreed ratio based on the type of Takaful plan, provided that the Participant has not incurred any claims and/or the Certificate Owner has not received any benefits payable under each type of cover under this certificate whilst it is in force.

Contribution is the gross amount paid by the participant without any deduction of charges in participating in any Takaful plan. Whereas tabarru’ is the net portion of participant’s contribution channeled into the Participants’ Risk Fund (PRF) for the purpose of mutual help and payment of eligible claims.

Your Takaful agent will usually conduct a Customer Fact Find with you to determine your needs, preferences, and budget. Here is a simple checklist to get you started:

  • Risks that you wish to cover
    • While Family Takaful plans generally cover death, some plans cover more specific risks such as the early onset of a critical illness, accidental death, and partial disability.
  • Your financial goals
    • They can be as specific as legacy planning for your children or saving for your retirement years. These goals should have specific time frames or investment horizon(s).
  • Your desired protection level

    This is generally based on many factors, some of which are:

    • how many dependents you have (e.g. retired parents, spouse, children)
    • your outstanding long-term financial commitments (e.g. housing financing, education fund)
    • your current lifestyle/standard of living
    • your current savings and investment assets
    • projected cost of expenses in the future based on currency valuation and inflation (e.g. an education degree at a private university today may cost 50% more years down the road)
  • Your budget
    • The amount that you can set aside for Family Takaful after deduction of expenses, commitments and savings.
  • Your risk appetite
    • You need to consider your risk appetite if you plan to participate in an investment linked Takaful plan. Knowing your protection purpose will also help you decide if you should invest conservatively or otherwise.


Traditional Family Takaful offers protection / coverage with contributions that are payable throughout the duration of the Takaful certificate. The benefits payable are guaranteed, although some plans also offer non-guaranteed benefits such as cash bonuses.

Traditional Family Takaful plans that are commonly available in the market are:

  • Term Takaful which provides coverage for only a fixed period of time, ranging from 5 years to 30 years or more. Since there is no savings or investment feature, no cash value is payable if the certificate is terminated prematurely. Upon death or Total and Permanent Disability (TPD) of the person covered during the certificate term, or at the end of the certificate term, the certificate will pay out the sum covered or offered from the contributions paid (depending on the product features). It is a cheaper alternative compared to the other Takaful plans.
  • Long Term Saving Takaful offers coverage and savings for a fixed period of time. A lump sum benefit is payable at the end of the certificate term or upon Death or Total and Permanent Disability (TPD) of the certificate owner or person covered during the certificate term. Some Long Term Saving Takaful certificates may also pay out a guaranteed cash benefit yearly throughout the certificate term, provided the certificate owner or person covered lives until the end of the certificate term.


Unlike traditional Takaful, investment linked Takaful plans is flexible as it allows you to adjust the protection and investment levels according to your needs and goals.

  • Regular Contribution Investment Linked Takaful provides long-term coverage and the opportunity to grow your investments. A lump sum benefit is payable upon death or Total and Permanent Disability (TPD) of the person covered during the certificate term, or upon maturity of the certificate. Generally, the lump sum benefit payable includes the sum covered and the total investment value of your certificate.
  • Single Contribution Investment Linked Takaful is designed primarily for investment purposes. These type of plans may not offer as much coverage as regular contribution investment linked Takaful plans, but the contribution allocation rates are much higher.

This refers to a percentage of the contributions paid that is set aside for investment into the investment linked funds of your choice.

Unlike traditional Family Takaful plans, investment linked Takaful plans offer the flexibility to increase or decrease your coverage level (ie. your sum covered) at any time throughout the duration of the certificate subject to underwriting.

No, the returns on investment linked funds are not guaranteed. This is because the price of the fund units may rise or fall depending on the market value of the fund.

No, it is not advisable to surrender your existing Takaful plan if you decide to change the investment fund. This is because you may get less than what you have invested due to fees and charges. What you can do is to switch funds and most Takaful companies allow one switch per year without any fee. However, for additional switches, you may be charged a processing fee.

Yes, you are allowed to top up your existing investment linked Takaful plan at any time. The 'top-ups' are normally used to enhance the investment portion of both single and regular contribution plans without any change in the Takaful coverage. You can also increase the coverage for death, critical illness, hospitalization, accident, and others.

There is no fixed period of time for you to hold on to your investment linked Takaful plan. It is like a savings account in a bank or a unit trust in which you may decide on the duration of holding onto your plan. However, it is not advisable to hold the plan for a short period of time in view of the high initial costs.


Medical and health Takaful covers medical and surgical related expenses such as the cost of hospitalization, surgical fees, and physician consultation fees. The contribution rates are calculated based on your attained age, gender, occupation, health condition and the selected plan. They are not guaranteed and may be revised from time to time. This is due to the ever-increasing number of medical claims and escalating medical costs.

  • Co-Takaful / deductible

    • Co-Takaful – you pay a percentage of the incurred medical expenses, as stipulated under the terms and conditions in the certificate. However, some plans may set a limit on the Co-Takaful payable; for example, 10% Co-Takaful on the medical bill, up to a maximum of RM 500.
    • Deductible – you pay a stipulated amount of the incurred medical expenses, the excess of which will be covered by the Takaful Operator. For example, if your plan has a deductible of RM 2,000, it means you pay the first RM 2,000 incurred in a medical bill while the company covers the rest. If the medical bill is less than RM 2,000, the Takaful Operator does not bear any cost.
  • Benefits – exclusions and limitations

    • It is important for you to understand the general exclusions and limitations of a medical and health Takaful certificate. For example, any medical event as a result of a pre-existing medical condition is not covered. Selected illnesses that occur within the first 120 days from the commencement date of the certificate are not covered as well.
    • Ask your servicing agent to go through the list with you.
  • Pre-existing medical conditions

    Your coverage will be based on the information provided in the proposal form, medical examination report (if required) etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

  • Contribution Rate

    Unlike other types of traditional Family Takaful, the contribution rates for medical and health Takaful are not guaranteed and may be revised from time to time. This is due to the ever-increasing number of medical claims and escalating medical costs. The contributions will also increase as you grow older. Ensure that contribution payable under the certificate is an amount that you can afford.

  • List of panel hospitals

    Ask your servicing agent for the list of panel hospitals under the medical and health Takaful certificate. It is important that you are satisfied with the coverage provided in your city of residence.

  • Family vs. individual coverage

    Some Takaful Operators offer discounts when you sign up for two or more certificates for your loved ones.

‘Guaranteed renewal’ means that the Family Takaful Operator guarantees the renewal of the certificate, subject to the terms and conditions specified in the certificate. The contributions payable, however, is not guaranteed nor fixed.


  • In practice, the renewal of the certificate is guaranteed until/unless certain events have occurred, such as:

    • You did not pay your contributions or did not pay them on time;
    • You misrepresented a material fact, for example age or a medical condition, during your application;
    • You canceled the certificate;
    • The total claims under the certificate have reached the overall limit specified; or
    • You have reached the age limit for coverage at the point of certificate renewal.


  • Deal only with registered agents

    Family Takaful agents who are registered with the Malaysian Takaful Association (MTA) are required to pass a Takaful basic examination (TBE) that is conducted by the IBFIM. They can only represent one Family Takaful Operator and provide advice on the products marketed solely by that operator. This restriction, however, does not cover other types of intermediaries such as financial planners (FA) or brokers.

    In dealing with a Family Takaful agent, always insist on seeing his/her authorization card that is issued by MTA. You can check the status of the agent via the MTA website. Visit for more details.

  • Know your rights

    If you intend to participate in a Family Takaful plan from Family Takaful agents, you can ask for a copy of the Takaful Operator’s service guide. It is a simple checklist detailing the obligations and value-added services that an agent provides at the respective stages; before you participate in a certificate, when you decide to participate in a certificate and during the term of the certificate.

  • Understand the product well

    Do not be tempted by verbal promises or guarantees of high returns. Insist on product-related documents such as Benefit Illustration, Product Disclosure Sheet and/or fund performance reports before committing to participate in a Family Takaful certificate.

  • Disclose required information

    Takaful Operators have put in place an underwriting process to determine what type of risk you are to the Takaful Operator and for the company to decide whether or not to accept the risk.

    The risk of death or a critical illness is determined by several factors such as age, gender, lifestyle habits, personal and medical history, occupation, and etc. You would probably come across these terms:

    • Standard Risk – It generally means you do not have any serious medical condition, or you hold a low-risk occupation. You are charged standard contribution rates.
    • Sub-standard Risk – It generally means you have pre-existing medical condition(s), or you hold a high-risk occupation. As a person with a higher than average risk, you would either have to pay additional contribution (also known as contribution loading) or agree for certain exclusions to be included in your certificate. In some cases, the Takaful Operator may reject your Takaful proposal if they deem you to be a non-coverable risk.


    You must truthfully disclose information that is required in the proposal/application form. If you are unsure about disclosing certain information, it is recommended that you disclose it anyway. This includes any information that you may have given to your financial adviser or representative but was not included in the proposal form. The Takaful Operator’s decision to cover you is based on the information provided in the proposal / application form, medical examination report (if required), and etc. Non-disclosure of critical information such as medical history may lead to non-payment of claims, especially when it is discovered that the claim event is linked to a pre-existing medical condition.

  • Practise caution

    Make sure that the proposal / application form is filled in properly. Do not sign blank or incomplete forms. If you spot any inaccurate or missing information, ask for the form to be amended immediately. Do not release your identity card or credit card details to someone you do not know or without first clarifying why it is needed.

    If for whatever reason you decide to pass a cheque to your servicing agent to pay for your Family Takaful contributions, it is recommended that you refrain from doing so. Agents, even honest ones, can forget to pay for your certificate; which may cause your certificate to lapse after the grace period is up. Instead, opt for secure and convenient payment methods such as direct debit deduction.

Family Takaful is traditionally promoted through company-appointed intermediaries such as agents, brokers and bancatakaful partners. As professional financial planners, they are equipped with the relevant knowledge to advise and guide you in your participation of a Family Takaful certificate.

In recent years, Bank Negara Malaysia has mandated all Takaful Operators, through the Life Insurance and Family Takaful Framework, to set up a direct channel for Family Takaful plans. This means that you are given an option to participate in Family Takaful online or over the branch counter. Most Takaful Operators offer simple Family term Takaful plan through a direct channel; however, there are plans to add on other type of products in the future.

A benefit illustration is not a legal document. The legal obligations of a Family Takaful certificate are spelled out in the certificate document.

You can cancel your Family Takaful certificate within the 15-day ‘free look period’ by returning the certificate to the Takaful Operator after you have received the certificate document. The full contributions paid (less any medical fees incurred, if applicable) will be refunded to you.

Since participating in a Family Takaful certificate is a long-term commitment, it is not advisable to terminate your certificate early because the surrender value is usually less than the total contributions paid. You might also be charged with a higher contribution since you are older now. Depending on your health condition, your risk profile may change and the Takaful Operator may not be able to accept you on normal terms of coverage and thus, you may likely have to pay higher contribution for a similar protection provided previously.

There is a ‘grace period’, which gives you an additional period of time after the contribution payment due date. During this period, you can still pay your contribution and your certificate will continue to be active. For the monthly mode of payment, the grace period is usually 15 days, while for other modes of payments (semi-annually or annually), it is usually 30 days. If your Family Takaful certificate has lapsed, you may revive or reinstate it within a period of time and under certain conditions such as the declaration of your state of health at the time of reinstatement.

  • Traditional Family Takaful with Cash Value

    Your Family Takaful certificate may acquire a cash value after being in-force for a number of years (normally a minimum of three years). The cash value is the ‘savings’ portion of the certificate. Cash value is accumulated when your contribution payments are more than the tabarru’, so the excess goes into a cash value account to be invested for profit. If you decide to surrender your Family Takaful certificate, the cash value, also known as surrender value, will be payable. You will suffer a loss if you terminate / surrender your certificate before the maturity of the certificate.

  • Investment Linked Takaful

    When you terminate your investment linked Takaful certificate, you will receive the investment value of your certificate at the time of termination. As your surrender value payable is calculated based on the market value of the balance of units in your certificate, you may get back more or less than the total contributions paid.

Speak to your servicing agent about the options available.

  • Traditional Family Takaful with Cash Value

    The Family Takaful Operator can often make changes to ensure that your Family Takaful certificate can remain active without further contribution payments. Common option includes conversion of your certificate into paid-up certificate which involves reducing the initial sum covered or reducing the certificate term through utilizing the remaining cash value.

  • Investment Linked Takaful

    As a portion of the contributions paid is invested into investment funds of your choice, your investment linked Takaful certificate will accumulate an investment value over time. If the investment value of your certificate is substantial, your certificate will continue to remain active as long as the as there is sufficient value to pay for the tabarru’, certificate fees and fund management charges, where applicable. However, there is no guarantee as to how long the certificate will remain in-force as the investment value is dependent on the market value of the remaining fund units in your certificate’s investment account.

    You may elect to reduce your sum covered in an effort to reduce the Takaful charges and prolong the certificate term.

  • Agency
  • Banks
  • Direct Distribution – Online / Branch Counter
  • Direct Marketing / Telemarketing
  • Financial Advisers
  • Brokers
  • Post Office