Friday, March 28, 2008

Ijab or Proposal

Ijab or proposal is an expressed intention from the owner of risk to joint a Takaful risk sharing scheme and the willingness to undertake certain responsibilities, i.e paying contribution, follow the terms and conditions of the scheme etc.

To facilitate documented ad standardized Ijab, Takaful operators normally develop a standard proposal form to be completed and signed by the Takaful scheme applicants. How the proposal is designed and what information is in it, is the freedom of the operator to develop - the most important thing is that in this proposal there must be an expressed statement to document the Ijab.

The following are two examples of these statements that could be incorporated into a Takaful proposal form.

Expressed Statement in a proposal:

Example1 (Wakalah)

I/We agree to participate in this general Takaful scheme based on the principle of Takaful and to pay the contribution on the basis of Tabarru’ (donation) for the purpose of helping other participants who have suffered tragedy and with this contribution, I am entitled to the Takaful cover as expressed in the terms and conditions of this Takaful contract.

I further agree that my contribution be credited into the Takaful Fund (Fund) and to elect the ………..(The Operator) to invest and manage the fund according to the principles of the Shariah. I also permit The Operator to make payment of claims/Takaful benefits, provisions and reserves based on the guidelines and policies laid down by the authorities and The Operator to be paid a Wakalah free based on the rate of …. %

If at the end of each financial year, there is a surplus of income over liabilities in the Fund, I/We agree that The Operator receive ….% of it as incentive while the balance ….. % will be reserved for distribution amongst participants subject to the terms of this contract and fixed by the authorities

Expressed Statement in a proposal :

Example 2 (Mudharabah)

I/We hereby declare that all statements made above and other documents submitted in connection with this application are complete and true to the best of My/Our knowledge and belief. I/We agree that this declaration and all statements made above shall form the basis of the Takaful contract between Me/Us and ….. (hereinafter referred as the Operator). I/We agree that My/Our Takaful contribution shall be placed in the Takaful Fund and The Operator be appointed to manage and invest My/Our Takaful Fund to the expertise of the Company based on the Al-Mudharabah principle as defined by The Operator and in accordance to Shariah. I/We further agree that My/Our contribution shall be treated as Tabarru’ (donation) and be used to help other participants in time of misfortune. Any surplus from the investment and/or from the Takaful operation, shall be returned to Me/Us after deducting a Mudharabah portion of the Operator of …. % from the Surplus