Insurance guideline

Introduction
 This is a guide to help you understand the fundamentals of insurance and takaful. It tells you about the types of insurance and takaful products available and the basic principles of insurance and takaful.

 What is insurance?
 You buy insurance to transfer the risk of loss to the insurance company and thereby reduce your financial hardship when you suffer the loss. For example, if your insured motor vehicle is involved in an accident, your insurance company will pay for the cost of repair. You buy insurance by paying a premium to your insurance company.

 What is takaful?
 Takaful is an insurance scheme based on Islamic principles of joint guarantee, where a group of participants agrees to mutually guarantee among themselves against a defined loss. If you join a takaful scheme, you agree to donate a certain portion of the contribution into a takaful fund to assist any member of the fund who has suffered any defined loss. Depending on the terms of the takaful certificate, a participant may also be able to share in the surplus of a takaful fund if he has not made a claim during the period of takaful. Anyone can join a takaful scheme regardless of his religious beliefs.

Why buy insurance or join a takaful scheme?
 The purpose of having insurance/ takaful is to reduce your financial burden when you suffer from losses or mishap so that there is minimal disruption to you and your family’s daily activities. However, an insurance/ takaful plan only covers you for losses specified in the plan. Therefore, if you are getting any insurance/ takaful, make sure it covers the losses you need to protect.

What type of insurance/ takaful products do I need?
 Your insurance/ takaful needs depend on your personal situation, age and lifestyle. However, certain types of insurance/ takaful are required by law, e.g. if you own a motor vehicle, the law requires you to have a cover to pay for liability caused by you to others

What are the types of insurance/ takaful products available?
 You can get different types of insurance/ takaful to cover things you own, your life, your health and for your retirement. You can find many types of products that can meet your needs. The common types of insurance/ takaful products are:

LIFE INSURANCE FAMILY TAKAFUL which is usually used as a means to provide financial aid for your dependants if you die. You may also save or invest through life insurance/ family takaful. Some life insurance/ family takaful products also pay out when you are unable to work due to illness or disability. Examples of life insurance/ takaful products are whole life/endowment, ordinary family and investment-linked

MOTOR INSURANCE TAKAFUL which pays for specific losses due to damage to your motor vehicle involved in an accident. It also pays for losses that your motor vehicle caused to others in an accident.

HOUSEOWNER HOUSEHOLDER INSURANCE/TAKAFUL which pays for specific losses when your home or your personal assets are damaged due to events like fire, flood, burst pipes, etc. You may also get protection against claims made by third parties arising from these events.

MEDICAL AND HEALTH INSURANCE TAKAFUL which pays for various types of hospitalisation and medical expenses that you may incur if you become ill or injured. These include payments for hospital room and board, professional fees, medical supplies and medical services

PERSONAL ACCIDENT INSURANCE TAKAFUL which pays a sum of money if you become disabled due to an accident or if you die