Takaful in the UAE offers a unique, ethical approach to insurance based on Islamic principles, making it a trusted option for many. Unlike traditional insurance, Takaful operates on a cooperative model where participants share the responsibility of protecting each other from financial risks.
This system is designed to provide peace of mind while adhering to Shari'ah law, ensuring that all investments and contributions align with Islamic values. Furthermore, whether you're looking to secure your family’s future, protect your business, or safeguard your assets, Takaful offers flexible coverage options tailored to your needs.
Takaful is a system built on fairness, transparency, and community support — any surplus generated is shared among participants. With the UAE’s growing demand for Shari'ah-compliant financial products, it stands out as a reliable and ethical choice for securing your future and building financial stability.
What is Takaful?
Takaful is a type of Islamic insurance where members contribute to a shared fund to support each other in case of loss or damage. It follows Sharia law, emphasising mutual cooperation and protection among participants.
Interesting Facts about Takaful
Members donate money to a shared fund for mutual support
The system ensures no one gains financially at the expense of others
Contributions are based on the coverage needed, what is being insured, and the duration, considering each member’s risk and situation
Losses are shared through a community pooling system agreed upon by members
Any surplus in the Takaful fund belongs to the policyholders, not as profit for the fund
Features and Benefits of Takaful
Here are the primary benefits of Takaful-
1
Risk Sharing and Accountability
The system promotes shared responsibility, encouraging participants to act responsibly. This is believed to be a key contributor to reducing fraudulent claims and protecting the community’s financial stability.
2
Wealth Building and Savings
Many Takaful plans include savings or investment features, helping participants grow their wealth while enjoying insurance protection.
3
Flexible Coverage Options
A variety of plans are available under this system, such as life, health, property, and business insurance, tailored to meet different needs and risks.
4
Social Contribution
Surpluses are either returned to participants or used for charitable purposes. This is done to support community welfare and appeal to those who value giving back to society.
Features of Takaful Policy
Takaful is a cooperative insurance model where participants pool resources to support each other against risks. Its features include —
Shariah-Compliant Coverage
Financial Inclusivity
Ethical and Secure Solutions
Takaful aligns with Islamic principles, avoiding interest (riba), uncertainty (gharar), and gambling (maisir) which are usually considered present in conventional insurance. Contributions, treated as donations (tabarru), are used to assist members in need — any surplus is fairly distributed among participants.
The system promotes inclusivity by offering affordable contributions, allowing people from all economic backgrounds to access essential insurance. It emphasises community-based risk sharing over individual risk assessments.
Grounded in fairness and transparency, Takaful ensures that contributions are used for the collective good. Funds are invested in Shariah-compliant, socially responsible ventures, assuring participants that their values and ethics are upheld.
Difference between Takaful and Conventional Insurance
Take a look at the key differences between Takaful and conventional insurance —
Basis
Insurance
Takaful
Concept
A financial contract where individuals or businesses pay premiums to an insurer for financial protection against specific risks
A cooperative system where participants pool funds to mutually protect against risks .The Takaful operator manages the fund as per Islamic principles
Payments
Policyholders pay premiums to transfer financial risk to the insurer
Participants contribute to a shared fund, collectively covering losses from the pool
Risk and Reward Sharing
The insurer takes on the risk, and any profit or surplus belongs solely to them
Surplus funds belong to participants and are distributed among them and the operator as per agreed terms
Principles
Follows conventional financial systems, using risk transfer to manage uncertainty
Aligns with Islamic finance, avoiding interest, uncertainty, and gambling
How Does Takaful Work?
Participants make contributions to the fund. These funds are managed by the operator on behalf of the participants, ensuring compliance with Islamic principles. All investments handled by the Takaful operator follow Shari’ah law.
Unlike conventional insurance, participants in Takaful retain ownership of the fund. Contributions are invested in Shari’ah-compliant (halal) funds to earn income. If the fund generates a surplus, it is shared among participants and, sometimes, the operator, creating a mutually beneficial system.
Losses and surpluses are shared among policyholders. For instance, if no claims are made in a year, the profits are distributed to participants. A Shari’ah committee oversees each Takaful fund, approving the surplus-sharing ratio annually.
Takaful funds often use the Mudarabah model, where the fund manager earns a share of the surplus instead of a fixed salary.
Does Policybazaar UAE Offer Takaful?
On Policybazaar.ae, you can find all types of insurance solutions — whether you’re looking for conventional or Takaful solutions.
Listed below are the major Takaful companies in the UAE —
28 Feb 2025Keyman Insurance UAE: Protecting Businesses from Financial LossLearn about Keyman Insurance in the UAE and how it protects businesses from financial loss due to the death or disability of key employees. Understand its benefits, coverage options, and how it ensures business continuity and financial stability.
21 Jan 2025ADCB Family Protector Plus Life Insurance in UAE, DubaiADCB Family Protector Plus Life Insurance - Get the Complete details of ADCB Family Protector Plus Life Insurance plan in UAE like features & benefits, eligibility, documents required & more.
Reviews
Qualified Policybazaar expert will assist you 
28 Feb 2025Keyman Insurance UAE: Protecting Businesses from Financial LossLearn about Keyman Insurance in the UAE and how it protects businesses from financial loss due to the death or disability of key employees. Understand its benefits, coverage options, and how it ensures business continuity and financial stability.
28 Feb 2025Understanding Accelerated Terminal Illness Benefit in the UAELearn about the Accelerated Terminal Illness Benefit Rider in the UAE, how it provides financial support during a terminal illness, and its key benefits.
21 Jan 2025ADCB Family Protector Plus Life Insurance in UAE, DubaiADCB Family Protector Plus Life Insurance - Get the Complete details of ADCB Family Protector Plus Life Insurance plan in UAE like features & benefits, eligibility, documents required & more.
21 Jan 2025DIME Analysis for Life Insurance: Calculate Your Coverage with ConfidenceLearn how to calculate the ideal life insurance coverage using the DIME formula. Protect your family's future by considering debts, income, mortgage, and education expenses.
