Takaful and Pricing:How pricing is done in takaful insurance.?

takaful is NOT insurance. It won't meet liability requirements by any entity, and there's no guarantee of payout.

In the Muslim society, insurance is considered non halal because insurance companies are offering products which are considered intangible at the point of sales.

Eveyone knows that Insurance is good, so Takaful concept is introduced. Takaful means risk sharing among the policy holders. Insurers will not underwrite the risk and they only operate the pool of money collected.

One thing that I personally discovered is the pricing mechanism for Takaful Product (either for Family or General) have their own set of rules and different from insurers. They will calculate based on their product portfolio and claim experience to price their products.

The Takaful Operator will deduct their operation cost from the Pool and Policy holders will be refunded if there are excess of money at the end of the policy term. Unlike insurance companies, they will keep the excess as their operating profit.

A very different concept compared to Conventional Insurance