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Benefits of Sharia Insurance


Benefits and advantages of Shariah insurance products

In general, the purpose of insurance products is to provide a sense of security against life's risks. Such as risks to health and life whose occurrence cannot be predicted.

For this reason, you have several options of insurance products to protect you and your family, such as life insurance or health insurance, both conventional insurance and Shariah insurance.

Before choosing the type of insurance you need, it's a good idea to find out about its benefits first. Such as the benefits and advantages of each insurance product available.

This time, let's take a closer look at Shariah insurance products. Basically, Islamic insurance and conventional insurance both aim to provide protection when risks come our way. The difference is that Islamic insurance offers the possibility for policyholders to help each other in benevolence towards other participants of Islamic insurance.

This is the advantage of Sharia insurance products, namely to protect and help each other. Thus, the policyholder does not only protect himself as a participant in the insurance. However, you can also help others.

Benefits of Shariah Insurance

Here are the advantages and benefits of Shariah insurance products :

1. Help through the Tabarru' Fund

The principle of mutual aid (takaful or ta'awun) is exercised through the investment of assets or Tabarru'. Tabarru' is a form of contract which is exercised for the purpose of benevolence and mutual aid, not only for commercial purposes. Tabarru' is what makes the difference as well as the advantage of Shariah insurance products. The Tabarru' Fund which is deposited by the participants of the Islamic insurance will be used to help the other participants in case of risk. In addition to gaining the benefits of financial protection by helping each other, participants can also invest.

2. There is a distribution and allocation of excess subscription

In Shariah insurance, the term Surplus Underwriting is known. The Technical Surplus is the positive difference between the Participant's total contribution to the Tabarru Fund after deduction of indemnities/claims, reinsurance contributions and technical provisions, over a certain period. This is not known in non-Sharia compliant products.

In Sharia insurance, the underwriting surplus can be divided into several allocations. Namely the Tabarru Fund, the policyholders and the insurance companies. Of course, the calculation is based on the percentage specified in the policy. If an underwriting shortfall occurs, the insurance company, as manager through the Qardh contract, will provide interest-free loans from the company's funds which will be channeled to the Tabarru fund as a source of payment for the customer complaints.

3. There is a distribution of profits according to the Akad

The principle of sharia insurance products is that no party feels disadvantaged. For what? Indeed, the Sharia insurance company only manages the participants' funds. So if there is a profit in managing these funds, the results will accrue to the participants. Thus, the participants and the Shariah insurance companies will get a share in the profits depending on the contract used.

4. Free Riba

Riba comes from the term usury fadhl, which means excess (fadhl). Thus, fadhl usury is an excess or increase in quantity in a transaction of sale and purchase of similar goods, such as silver, gold, wheat or other objects, the amount of which is not the same. Conventional insurance is classified as containing wear and tear because the amount of premiums deposited by participants is not the same as the amount of claims or indemnities they receive. The transfer between premiums and claims does not take place at the same time. Investments contained in conventional insurance are also placed in ribawi instruments.

Conversely, Islamic insurance is said to be wear-free because no participant funds are confiscated. This is because Islamic insurance will provide clients in the form of claims, compensation or excess underwriting. In addition, incoming funds will be managed in Sharia-compliant investment instruments under the supervision of DSN-MUI and OJK. Investments offered in Sharia Insurance also use clear contracts so participants are more comfortable.

5. More transparent

The management of funds by Shariah insurance companies is carried out in a more transparent manner both in terms of the use of insurance participants' contributions, underwriting surplus and the distribution of investment returns. When there is an underwriting surplus, the insurance company divides it into three parts whose value has been indicated in the contract. This profit-sharing is made up of the part that goes to the Tabarru Fund, the part that goes to the participants and the part that goes to the insurance company.

Profit-sharing is also carried out proportionally. In other words, participants who contribute a lot will also get a large share of the profits. The profit-sharing provisions contained in the contract since the inception of this agreement show that Islamic insurance is transparent.

6. Overseen by Shariah Supervisory Board to ensure transactions in accordance with Shariah principles

The Sharia Supervisory Board (SPD) oversees adherence to Sharia principles in the business activities of Sharia financial institutions, including Sharia insurance. This is possible because DPS members are a recommendation of the MUI National Shariah Council.

Besides its supervisory role, the DPS also does not have the function of approving transactions carried out by Sharia insurance, so that they comply with the principles of Islamic Sharia. For example, determining which instruments can be used as an investment portfolio by Islamic insurance.

Sharia insurance products

One of the Sharia life insurance products that can provide these benefits is MiSmart Insurance Solution Syariah (MiSSION Syariah) from Manulife Indonesia.

It is a Shariah insurance product from Manulife Indonesia that provides life protection, optimal investment and end-of-life benefits from the Shariah life insurance program in accordance with the principles of Islamic Shariah.

The 3-in-1 solution (providence, investment and health) will provide comfort and serenity in the face of risk.

In addition, MiSSION Syariah offers participants the possibility to choose contributions according to their needs. MiSSION Syariah also comes with health insurance as top-up insurance and a total participant loyalty benefit of up to 750%.

Thus, the benefits and advantages of Shariah insurance products do not only provide protection and comfort of life. But you can also sow blessings and share for others with Sharia assurance.