Takaful uses solidarity and brotherhood as the driving force. The participants in Takaful pool their contributions in a mutual fund (Takaful fund) which is called Waqf and is used to compensate a participant in the event of a mishap (an event covered by the policy). As in any Waqf, the ownership belongs to Allah (SWT) and not the participants of the fund or the operator. The payments made by the participants are not considered ‘premium’ as in traditional insurance. Instead, these payments are regarded as a contribution to the Waqf. The Waqf invests the money into Shariah-compliant businesses. Similar to traditional insurance, the amount and extent of coverage depends on the requirement of the individual participants and may vary from person to person. After taking into account all of the costs and after paying for the claims, the remaining funds belong to the participants.
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