A1.

1 Introduction to Shariah
1.1.1 Objective of Shariah
Shariah is the entire body of Islamic law, and the term literally means "the way to the water source." It
is a wide-ranging body of law and personal rules, regulating matters not limited to jurisprudence,
politics, business, banking, family, and society. The main objectives of the Shariah is to ensure that
human life is based on maruf (good) and to cleanse it of munkar (evils). The term maruf denotes all
the qualities that have always been accepted as good by the human conscience, and conversely, the
world munkar denotes all those qualities that have always been condemned by human nature as
evil.
1.1.2 The Concept of Ad Deen (Shariah)

Broken down to its bare elements, Islam comprises of Aqidah (a set of beliefs), Shariah (a set of
laws) and Akhlak (a code of moralitie).
Aqidah means a set of beliefs. From the Islamic point of view, Aqidah means strong belief in Allah
s.w.t, His Prophets and the hereafter, also belief in the angels, the holy books and predestination.
Shariah or Islamic law is also known as Fiqh . Fiqh is Islamic jurisprudence. Fiqh deals with the
observance of rituals, morals and social legislation in Islam. Branches of Fiqh includes Ibadat,
Muamalat, Munakahat and Jinayat.
Fiqh
Ibadat
The rules of ritual purification, prayer, pilgrimage, fasting, zakat, jihad and some other
forms of worship are dealt under this heading. Most of these rules deal with the rights
owed to Allah s.w.t by the individual alone or by the community as a whole.

Fiqh
Muamalat
This area deals with property, contracts, business organisation, security of debts and

insolvency, pre-emption, gifts, bequests and waqfs.

Fiqh
Munakahat/Usrah
This area deals with marriage, divorce, inheritance, guardianship and related matters. This
is similar to conventional version known as personal law.

Fiqh
Jinayat
This area deals with major offences like illicit sexual (zina), theft (sariqah), robbery, pirate
and brigandage (hirabah), and other matters collectively known as hudud laws.
Akhlaq is a term referring to the practice of virtue, morality and manners in Islamic theology and
falsafah (philosophy). It refers to ones disposition, nature, temper, ethics, morals or character (of a
person). Akhlaq covers all aspects of Muslim behaviour, attitude and work ethics which influence his
acts.
1.1.3 Mandatory Law (Hukm Taklif)
Taklifi law is the law that describes the commands, prohibitions and the option to run or leave an
activity / job. According to Islamic terminology, the acts of a Muslim must be guided by these five
commandments (al-Ahkam al-Khamsah) classified as follows:
Wajib
(obligatory)
The term wajib means an act the performance of which is obligatory for the subject.
Example: performing solat and fasting in month of Ramadhan. In its technical sense, it is
an act whose commission is demanded by the Lawgiver (Allah s.w.t) in certain and binding
terms.

Mandub
(recommended)
Mandub is defined as a demand by the Lawgiver (Allah) for the commission of an act
without making it binding and without assigning any blame for its omission. The rule for
mandub is that for doing so there is reward (thawab) for the doer, while omitting it entails
no penalty such as giving charity to the others.

Haram
(prohibited/unlawful)
Haram is defined as one which omission is required by the Lawgiver (Allah) in binding and
certain terms. An example of prohibited act (Haram) is the misappropriation of anothers
wealth.

Makruh
(reprehensible
or
disapproved)
Makruh is defined as one which omission is demanded by the Lawgiver (Allah) in non-

binding terms. An example of reprehensible act (Makruh) such as debt which is not
documented (unrecorded).

Mubah
(permissible)
The Mubah or permissible act is one in which the Lawgiver (Allah) has granted a choice of
commission and omission, without blame or praise for omission or commission. According
to this principle, all contracts and transactions are permissible, unless there is evidence
indicating otherwise.
1.1.4 Primary and Secondary Sources of Shariah
Nos.

Primary Source

Description

i Quran

The Quran is the very word of Allah s.w.t revealed to

the Holy Prophet (pbuh) for the benefit of all mankind.
It is a divine revelation and is the first and main source
of Islamic Law and to the Muslims, the absolute
authority in deciding the legality and every legal
obligation. The Quran is a comprehensive and
indivisible guide and must be accepted and
implemented in its entirety

ii As-Sunnah

The Sunnah, means method, that includes all that is

from the Holy Prophet (pbuh) comprises what the
Prophet (pbuh) said (Qaulan), did/action (Filan) and
agreed (Taqiran). Whatever originated from the Holy
Prophet does come out from his own desire, but it is an
inspiration from Allah s.w.t.
The word Sunnah should be distinguished from the
term Hadith, which is a narration of the saying of the
Holy Prophet.

Nos.

Secondary Source

i. Ijma

Description
Ijma is Juristic consensus of opinion of the imams
mujtahid among Muslims in a particular time after the
death of the Prophet (s.a.w.) regarding the legal
position of a matter or problem.
In its application, Ijma is an agreement of Muslim jurist
in the event the ruling being sought is not found in
either of the main sources ie the Quran and the
Sunnah. All the mujtahidin must reach a consensus on
a juridical opinion at the time an issue arises.

ii Qiyas (Analogy)

Qiyas means to equate the legal position of a matter

that has no ruling from the Quran and the Sunnah to
one that has due to the illat (underlying cause or
reason) of the ruling. In other words, the mujtahids
refer back to the Quran and the Sunnah and make an

analogical reasoning between a new matter that has

no ruling with the one that already has a ruling.
Literally, it is the extension of a Shariah value from the
original case to a new case, because the new case
has the same effective cause as the original case.
iii Maslahah

Maslahah ('public interest') is a concept in traditional

Islamic Law, invoked to prohibit or permit something on
the basis of whether or not it serves the public's benefit
or welfare. The concept is related to that of Istislah.
While the meaning of maslahah is 'public interest', the
meaning of istislah is 'to seek the best public interest'.

iv Urf

Urf is a term referring to the custom or 'knowledge' of

a given society, leading to change in the fiqh. `Urf is a
source of Shariah rulings where there are no explicit
primary texts of the Qur'an and Sunnah specifying the
ruling. `Urf can also specify something generally
established in the Quran and sunnah.

v Istishab

Istishab means presumption of existence or nonexistence of facts. It can be used in the absence of
other proofs (dalil). Istishab relates to the sense that
the past accompanies the present without any
interruption or change.

vi Istihsan

Istihsan means juristic "preference". Muslims scholars

may use it to express their preference for particular
judgments in Islamic Law over other possibilities. It is
one of the principles of legal thought underlying
personal interpretation or ijtihad.

1.1.5 Objectives of Shariah (Maqasid Shariah)

Maqasid is the Arabic word for goals or purposes. In Islamic context, it can refer to the purposes of
Islamic faith. In terms of Shariah, there are five Maqasid (foundational goals). The five maqasid are
as follows:The preservation of:

Description/Remarks

Religion

Shariah requires the preservation and protection of Deen

(religion) under all circumstances for example defending the
Islamic faith particularly if it attacked by the enemy of Islam.

Life

Shariah requires the preservation and protection of life under all

circumstances as an example in order to protect life is enacting a
severe punishment for those who kill others. The punishment for
those who kill innocent human being is the death penalty in Islam.

Lineage

Shariah requires the preservation and protection of descendants

and honour under all circumstances like Islam prohibit it followers
in committing adultery or other immoral behaviors.

Intellect

Shariah requires the preservation and protection of intellect and

mind under all circumstances. Protection of mind requires
safeguarding it from anything that might harm the ability and

functions of the brain, this include the consumption of liquor or

similar substances that will upset the functions of the brain.
Property/Wealth

Shariah requires the preservation and protection of property

under all circumstances. There are several ways of acquiring the
property of others illegitimately. Among these are taking riba,
cheating in transactions, breaking the trust in matters related to
property, stealing the property of others and other similar means.
The Shariah prohibits all these means.

A1.2 Basic Muamalat

1.2.1 Introduction to Muamalat
The literal meaning of the term Muamalat (plural of Muamalah) is the transactions while its
technical idea is any form of mutual dealings held between men to solve their everyday needs,
especially in matters relating to trade and commerce. Muamalat is a social relationship which consists
of various economic and non-economic activities.
Basic Principles of Muamalat
Among the basic principles that play the role in forming Shariah rulings in Muamalat are:
Freedom
of
contract
Muslims are free to put conditions in their agreements except that which prohibits
something which is permissible or permits something which is prohibited.
Permissibility
as
original
status
of
matters
The status of all matters other than rituals is permissible until evidence is given that a
certain matter is prohibited.

Custom
is
of
force
A fiqh legal maxim states that Custom is of force. In many Shariah commercial contracts
many things become permissible following customs.
1.2.2 Prohibition in Muamalat
All economic activities are legally permissible as long as these activities do not transgress any of the
tenets of Shariah. In line with this maxim, it is the unanimous opinion of all four major Islamic Shariah
School of thought (Shafii, Hanafi, Hanbali, and Maliki) that all forms of business transactions that
transgress any of the tenets of Shariah are considered invalid.
General Principles:
No contract should be made for selling or buying forbidden products such as alcohol or any

other forbidden substances.

Likewise, no contract should be made for any financial deal on the basis of usury (riba).
Contract involves in gambling (maisir) is forbidden in Islam.
Contract that involves major uncertainty (gharar) is also forbidden as gharar may made the
contract voidable
Riba
(Usury)
The Arabic word 'riba' literally means 'increase in' or 'addition to' anything for example, to
the
effect
made
through
the
following
Qur'anic
verse:
"O you who believe, devour not usury, doubling and quadrupling, the sum lent. Fear Allah
and observe your duty to Him, that you may really prosper." Qur'an (3:130)
The

Prophet

Muhammad

s.a.w.

said,

Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by
dates, and salt by salt - like for like, equal for equal, payment being made on the spot. If
the species differ, sell as you wish provided that payment is made on the spot'. [Reported
by
Muslim].
From the above hadith, gold and silver represent money while wheat, barley, dates and
salts represent fungible item or food stuff. These items are known as ribawi item.
It would appear that the prohibition regarding riba has two dimensions. The first one
prohibits increases arising from debts/loans (duyun), known as Riba Duyun, while in barter
trades (buyu), unequal exchange of ribawi item of same kind and same basis in is known
as
Riba
Buyu.
This
can
be
summarised
as
follows:
Riba Duyun (singular dayn) is formed through financial loan:
i. Riba Qard - where the increase (interest) on the principal sum of the loan is agreed
upon at the point of contract;

ii. Riba Jahilliyah - this refers to the increase levied on the borrower for late repayment
or failure to repay the financial loan.

Riba Buyu (singular Bai) is formed through exchange contract in barter trade; i.e Riba
Fadhl (happen in unequal exchange of its counterpart) and Riba Nasiah.(due to extension
of
time
of
delivery).
The following rules of exchange apply in deciding whether the said transactions fall under
Riba
Fadhl
or
Nasiah.
Rule
1:
exchange between ribawi materials of the same kind (and of the same basis) must be with
equal weight, measurement or number and payment delivery must be made at the same

time.
i. If payment and delivery are made at the same time but the weights, measurements
or numbers of the materials exchanged are not equal, then Riba Fadhl occurs.
ii. If payment and delivery are not made at the same time but the weights,
measurements or numbers of the materials exchanged are equal, then Riba
Nasiah occurs.
Rule
2:
payment and delivery between ribawi materials of different kinds and of the same basis
must be made at the same time, though they may be made at different prices. Equal
weights, measurements or numbers of the materials exchanged are not required to be
observed here.
iii. If payment and delivery are not made at the same time (on spot), then Riba Nasiah
occurs

Maisir (Gambling)
Any transaction or activity relating to games of chance or gambling. A contract that
involves element of maisir (gambling) is Batil (void). Maisir can be concluded as betting or
charging something that will be forfeited if one fails to obtain the greater gain that one
hopes for. It is also defined as zero-sum game i.e the sum of those who gain and those
who lose equal to zero. For a transaction to be equated to gambling, it must involve the
devouring and unlawful appropriation of the property of others.
Allah SWT says:
"They will ask thee about intoxicants and games of chance. Say: In both there is great evil
as well as some benefit for man; but the evil which they cause is greater than the benefit
which they bring." Quran (2: 219)

Gharar (Uncertainty)
Gharar or uncertainty makes a transaction or activity un-Islamic as it will result into an
unjust or unfair outcome for the parties involved. It is where the quantity and the quality
involve in the transaction is not predetermined and known. Ayub (2007) Gharar means
hazard, chance, stake or risk. Gharar occur when there is element of uncertainty in a
transaction whose existence or characteristics are not definite, due to the risky nature
which may makes the contract void or voidable.
The Messenger of Allah s.w.t also forbade us from Gharar, Al-Baji Al-Andalusi states:
The Prophet (s.a.w)s prohibition of the sale of al-gharar render such a sale defective. The
meaning of sale of al-gharar refers to sale in which gharar was the major component,
leading it to be justifiably described as sale of al-gharar. This is the type of sale which is
unanimously forbidden. On the other hand, minor gharar does not render a sale contract
defective, since no contract can be entirely free of gharar. Gharar can be divided into Minor

Gharar and Major Gharar.

i. Minor
(Yaseer)
Gharar
Minor Gharar is forgiven as it does not render a sale contract defective. It is a
Gharar which does not affect the principal components (arkan or essential
elements) of the contract and necessary conditions of the essential elements (e.g.
requirements relating to asset, price, language of the contract etc).

ii. Major
(Fahish)
Gharar
The Gharar that causes a contract to be invalid is major (excessive) Gharar. In
general terms, major Gharar is:
an uncertainty which is so great that it becomes unacceptable; or
It is so vague that there is no means of quantifying it.
1.2.3 The Concept of Contract in Muamalat
Barbati defined aqad or contract in his kitab Inayah ala Fath al-Qadri as follows:
Legal relationship created by the conjunction of two declarations, from which flow legal
consequences with regard to the subject matter.
The literal meaning of aqad is join or tie. The English word for aqad is contract. Contract can
also be defined as being an expression of the matching between a positive proposal made by one of
the contractors and the acceptance of the other contractor in way which has an impact on the subject
of the contract. A contract must consist of:
Elements of Aqad

Descriptions/Remarks

Aqidan (the parties to the contract)

It is a condition of a valid contract that the parties

possess capacity. Capacity is a quality which makes
a person qualified for acquiring rights and
undertaking duties and responsibilities.

Sighah

Sighah is the form of the contract consisting of ijab

and qabul (offer and acceptance). The offer made by
the first party to the contract is called ijab because it
gives and confirms the freedom of acceptance to the
second party.

Maaqud alaih

The subject matter and price. They are conditions to

be taken into consideration according to Islamic
jurisprudence for subject of contract has to be legal,
in existent and identified.

A1.3 Application of Shariah Contract Commonly Used in Takaful Business

Contracts in Islamic law both bilateral as well as unilateral contracts. A contract can be define as the
connection of offer and acceptance that result in legal effort on the subject matter of the contract. Any
dealing in property needs a relevant underlying contract that is compatible with the purpose of dealing.
A takaful scheme essentially involves two main parties, that is takaful operator and a group of participant
which is commonly known as policyholders in conventional insurans. Briefly, the actual contract
underlying relationship between takaful operator and participants can be any of the following contracts,
that are Kafalah, Tabarru Wakalah, Ujrah, Jualah, Mudharabah and Musharakah depending on the need
or prefence of the parties, the detail of those contract are as follows:
Nos.

Underlying Contract

Supported Takaful Contract

i. Kafalah

In Takaful business, the participant contributes

to the Takaful fund by a mutual agreement that
A contract of guarantee whereby a the takaful operator is entrusted to undertake
person adds to himself a
in managing the takaful fund prudently and to
responsibility or liability on behalf of pay the takaful benefits to the participants in
another person.
the event a misfortune. The Kafalah contract is
prevailing in the takaful operational system in
Malaysia and worldwide.

ii. Tabarru
Means gift or donation which is
given by one in favor of someone
without seeking any consideration.

In Takaful business, the participants mutually

agree to contribute a sum of money to the
Takaful fund based on the contract of Tabarru.
Tabarru contract is the core element in takaful
business and is not only practiced in Malaysia
but also the Tabarru contract is practiced
worldwide.

iii. Wakalah

In Takaful business, the participants appoint

the takaful operator as their wakil and to
A contract of agency, in which a
manage their takaful coverage and the takaful
person delegates his business to
fund. The wakalah contract is practiced by all
another and substitutes the other in takaful operators in Malaysia most of the
his place. The person delegated is takaful operators worldwide operational under
called Wakil. Thus, both the
the wakalah model
principal and the wakil are equally
bound by each other under contract
of Wakalah.

iv. Ujrah
A contract of hiring whereby one
person hires someone for definite
services, in which the hirer is under
the duty to provide a reward for the

In Takaful business, the participant contributes

to the Takaful fund by a mutual agreement that
the takaful operator is entrusted to manage the
takaful fund prudently in terms of investment
and pay out takaful benefits to the eligible
participants in the event of a misfortune. The

services rendered to him.

v. Ju'alah
A contract of hiring for services, in
which one party undertakes to pay
a specified amount of money for
rendering a defined service in
accordance with the terms
negotiated between them.

vi. Mudharabah
The nature of Mudarabah (profit
sharing) practices is that, it is a
financial contract whereby one
party called Rabbu al-Mal provides
fund to the other party called
Mudharib who undertakes to
manage the fund through
investment or trade and generates
profits, in which both the Rabbu alMal and also the Mudharib shre in
the profit in a pre-agreed
proportion.
vii. Musharakah
The contract of Shirkah
(partnership). Musharakah is an
agreement between two or more
parties to operate a particular
business in which all parties
contribute to the capital in view of
profit. In al-Musharakah dealing,
the parties involved herein share
the liability, profit, and also loss
according to their agreement.

takaful operator is entitle to a fee for the

service rendered. The Ujrah contract is
practiced by all takaful operators in Malaysia
most of the takaful operators worldwide
operational under the wakalah model.
In Takaful business, the participants contribute
a sum of money to the takaful fund. The takaful
operator is entrusted to manage the takaful
fund prudently in terms of investment and pay
out takaful benefits to the eligible participants
in the event of a misfortune. The takaful
operator is entitle to a fee for the service
rendered. The Jualah contract practiced by all
takaful operator in Malaysia and most of the
takaful operators worldwide operational under
the wakalah model.
In Takaful business, the participants contribute
a sum of money to the Takaful fund in which
the participants are like Rabbu al-mal, while
the Takaful operator is like Mudharib who
agrees to manage the fund in view of making
profit in which both, the participants and also
the operator share the profit proportionately.
Mudharabah contract as practiced by Syarikat
Takaful Malaysia when it first started operation.
However, for some takaful operators in
Malaysia Mudharabah is still practiced only on
certain products.

In Takaful business, the respective

shareholders mutually agree to contribute a
sum of money to initiate the takaful business.
This mutual agreement among the
shareholders is called musharakah.
Musharakah contract is practiced among all
the Shareholders of all takaful operators in
Malaysia and most of the takaful operator
worldwide.

A13.9 Claims Example

Fazlina participated in a medical and health Takaful plan on February 10, 2010. The plan provides an
annual limit of RM 100,000 and a lifetime limit of RM 500,000. She also includes the hospital
allowance rider of RM200 per day. The plan provisions also stipulate a 10% co-Takaful requirement.
She was admitted into hospital on August 20, 2011. This was the second time she got admitted. She
was admitted for the first time on January 2011 with a bill of RM10,000. She was discharged three
days later. His total hospital bill amounted to RM 5,500.
Firstly, the claims department needs to conduct the preliminary investigation to determine the
following:

Is the certificate in force?

Has contribution been paid?

Is the cause of hospitalization included as exclusion in the certificate?

Is the subject matter affected by the loss the same as that insured under the certificate?

Is the annual and lifetime been breach?

If everything is cleared, this particular claim may be considered by the Takaful operator for
reimbursement. In most cases, the Takaful operator will not reimburse the full amount as there are
items in the bill that are not covered under the certificate.
Assuming that, say only RM 5,000 out of the RM 5,500 hospital bill is considered eligible for
reimbursement. Taking into consideration the 10% co-Takaful, the reimbursement amount is
RM4,500. Fazlina will end up having to pay RM 1,000 out of her own pocket.

A13.8 Disputes
A small proportion of many claims settled each year by Takaful operator usually end
up in disputes. The disputes between claimants and the Takaful operator generally will
involve one of the following two issues:
The question of whether the Takaful operator is liable;
The quantum of loss, if the Takaful operator is liable.
When a dispute arises, it may be resolved through the following channels:
1. Negotiation

and

Compromise

Settlement

In the event of dispute, normally the first step taken by a Takaful operator is

meeting the claimant to settle the dispute through discussion. The Takaful
operator representative, normally the staff of claims department will explain the
reason
for
the
rejection
of
the
claim.
In the case of dispute on the quantum of loss, the representative may try to
negotiate for an amicable compromise, which is acceptable to both parties. This
kind of settlement will usually result in the Takaful operator paying something
more than its interpretation of the facts would warrant and the claimant
accepting payment for less than that claimed.

2. Litigation
A claimant may take the Takaful operator to court if he is unhappy with the
outcome of his discussion/negotiation with the claim department. However, the
Takaful operator normally considers litigation as a last resort. The Takaful
operator will use other platform such arbitration or Financial Mediation Bureau
unless it involves a huge claim or an important point of principle.

3. Arbitration
An arbitration clause which provides that all disputes or disputes relating to
quantum only will have to be referred for arbitration is normally included in
most
of
general
Takaful
certificate.
Arbitration is a well-established and widely used means to end disputes. It
provides parties to a controversy with a choice other than litigation. Unlike
litigation, arbitration takes place out of court: the two sides select an impartial
third party, known as an arbitrator; agree in advance to comply with the
arbitrator's award; and then participate in a hearing at which both sides can
present evidence and testimony. The arbitrator's decision is usually final, and
courts rarely reexamine it.
Mediation
The Financial Mediation Bureau (FMB) is an independent body set up to help settle
disputes between the customers and their financial services providers regulated by

Bank Negara Malaysia.

The FMB serves as a centre that provide free, fast, convenient and efficient avenue for
the resolution of a broad range of retail consumer complaints. The scope of
complaints mediated by FMB includes complaints from individuals, corporate
complainants and "third party" claims (property damages only).
For complaints, disputes or claims involving a financial loss, the limit for cases to be
mediated by FMB is set as follow:
RM200,000 for all motor and fire Takaful classes of business
RM100,000 for others.
Claims by "third party" claimants are limited to RM5,000.
Award or decision of the FMB is binding on the Takaful operator but not the
complainant. Complainants who are not satisfied with FMB's decisions may refer the
case to a court of law.
The address for FMB is;
Financial Mediation Bureau
Level 25 Darul Takaful
4 Jln Sultan Sulaiman
50000 Kuala Lumpur

A13.6 Settlement of Medical and Health Takaful Claims

The Takaful claims process ends with settlement. Once the Takaful operator completed the
investigation and decided to pay the claim, it will compute the amount payable and issue claim
payment to the claimant.

A13.5 Claim Investigation

The next part of the Takaful claims process is the investigation. A thorough investigation will be
conducted to determine whether Takaful operator as the insurer is liable for the loss. The extent of the

investigation will depend on the complexity and size of the claim.

The claim investigation process involves the following:
1. The claims department will investigate to determine the following:

The loss exists.

The loss is caused by a peril insured under the certificate.

The loss does not fall within the scope of an exclusion of the certificate.

The person making the claim is the rightful claimant.

2. Claims Documentation
Claim forms are designed to assist the Takaful operator to gather information relevant to
assessing claims. The layout of the claim form may vary depending on the insurance
company, but there is some information that must be provided no matter who the carrier is.

Participant's name

Participant's address

Phone number

Certificate number

Reason for the claim

The Takaful operator makes the position very clear by making a remark that the form is
issued without prejudice, which means that issuance of the claim form does not mean liability
is admitted under the certificate.

13.4 Checking Coverage

When a Takaful operator received the claim notification, the claims department will make a preliminary
check to see if the claim is valid.
1. The process begins with a determination of whether or not the claim is valid. Among other thing,
the claims department may check the following:

Is the certificate in force?

Has contribution been paid?

Is the loss caused by an insured peril?

Is the subject matter affected by the loss the same as that insured under the certificate?

Has notice of loss been given without undue delay?

2. Claim Form
Once the claims department completed the preliminary check and found the claim is valid, a claim
form will be given to the claimant. A clear instruction on the procedures and required documents
will also be given to the claimant. However, if the preliminary check shows that the claim does not
exist, the claim department will inform the claimant and stop the process.
3. Claims Register
All claims must be registered into the claim register once it is notified to Takaful operator. Takaful
operator must maintain an up-to date register of all Takaful claims as it serves as an official record
of claims. Takaful operator cannot remove any of the record from the register as long as they are
still liable for the claims.

A13.3 Medical Health and Takaful Claim Form

The Medical and Health Takaful is designed to elicit the information needed to determine the Takaful
operator's liability under the certificate. Generally it comprised a claimant's statement and an
attending physician statement. Some questions are relatively standard such as:

Name

Address

Date of birth

Takaful certificate number and group number

Information regarding if the certificate owner is covered under a group plan through his
employer

Description of the injury or sickness that caused the loss

Expect to provide not only the dates of any medical treatments or doctors visits, but also the date of

the injury or illness as well as the exact nature. There may be several additional questions or possibly
an additional form if an injury is involved because the Takaful operator will need to determine if the
injury is due to another person's negligence.
The claimant also needs to provide the authorization permitting any medical provider, physician, or
employer to release records or information concerning the insureds medical history or employment
status. This is to enable the Takaful operator to obtain records for a thorough review of the claim.

A13.2 Proof of Illness/Claim

The claimant is required to submit written proof of loss of claim within a time frame as stipulated in
the loss provision. In the case of a claim for hospital or medical expenses benefit, affirmative proof of
hospital confinement (original hospitalization bill and claim form) must be furnished within a stipulated
timeframe of the date of loss.
The claimant must first register their claims with the Takaful operator within the stipulated time frame
and submit all their documents for the easy processing of the claim. The documents that are needed
for the making claim are as follows:

Proof of identification,

The copy of the certificate document,

The original bills of the hospitals in which the insured was admitted,

The discharge certificate from the hospital, and

The original investigation reports.

Failure to furnish such proof within the time provided shall not invalidate any claim if it can be shown
not to have been reasonably possible to furnish such proof and that such proof was furnished as
soon as it was reasonably possible.

A13.1 Notification of Claim

The reason why people entered into Takaful contract is to be indemnified when a loss occur. However,
once an event of a possible claim occurred, the Takaful operator cannot start the claim process and
indemnify the certificate owner unless and until been notified of the claim. Thus, the notification of a claim
is fundamental to the Takaful contract.
The two main reasons why the claim notification is important: firstly, the Takaful operator must be given
the opportunity to investigate the claim and, secondly, the Takaful operator needs to raise a provision for
the cost of the claim.
Takaful certificate requires the certificate owner to notify the Takaful operator in writing of any claim within
a reasonable period, is usually between 14 days to 30 days. The claimant need to complete the claim

form and submit it to Takaful operator together with all supporting documents such as medical report to
substantiate the claim. All these documents are to be provided at the claimants own expense. Should an
insurer require further investigations, such additional cost of investigation would be at the insurers
expense.

A10.2 Scope of Cover

1. Medical

Expenses

Medical Expenses is to cover the treatment cost of a sickness and injury, subject to the limits and
conditions stipulated in the certificate. Medical expenses plan generally cover amounts above a
pre-agreed deductible.

2. Hospitalisation

and

Surgical

Hospitalisation and Surgical covers the expenses regarding hospitalization treatment cost. The
plan is intended primarily to cover expenses incurred by having surgery and hospital stays.
Coverage options and costs vary depending on the specific certificate plan. The plan, however,
often
is
not
as
comprehensive
as
major
medical
health
Takaful.
Generally benefits provided by a hospital and surgical Takaful plan include the following:

Hospital Room and Board

Intensive Care Unit

Hospital Supplies and Services

Anaesthetist's Fees

Surgeon's Fees

Operating Theatre Fees

In-hospital Physician's Visits

Pre-Hospitalisation Diagnostic Tests

Pre-Hospitalisation Specialist Consultation

Post-Hospitalisation Treatment

Emergency Accidental Outpatient Treatment

Ambulance Fees

Some plan may be extended to cover the following:

Hospital Cash Allowance

Outpatient Cancer Treatment

Outpatient Kidney Dialysis

Organ Transplant

3. Major

Medical

Expenses

Major Medical Expenses is a form of medical and health plan that provides benefits for most
types of medical expenses that may be incurred. Major medical expenses cover a much broader
range of medical expenses - including those incurred both in and out of the hospital - with
generally
higher
individual
benefits
and
certificate
maximum
limits.
The coverage for medical care charges is wider with few internal limits and a high overall
maximum benefit and may take the following forms:

Supplemental

Major

Medical

Expenses

When a Supplemental Major Medical Expenses plan is used, it typically backs up and
enhances a basic plan that usually includes hospital, surgical and medical coverage
along with an additional plan covering the broader range of medical expenses. Generally,
the basic plan will cover expenses with no deductible, up to the certificate's limit. Above
that limit, the supplemental plan kicks in, operating in exactly the same manner as a
comprehensive plan that does not provide first ringgit coverage. In simpler terms, after
the basic plan's limits are reached, the participant must absorb a deductible, after which
the supplemental major medical coverage will accomodate. Since the deductible actually
occurs between the basic and supplemental certificate, it's often referred to as a corridor
deductible. Like the Comprehensive Major Medical Plan, a supplemental plan is likely to
include
a
stop-loss
limit
and
a
maximum
lifetime
benefit
limit.
Example:Puan Sakinah participated in both basic medical takaful plan and supplemental major
medical takaful plan. She was hospitalized and her medical bill has exceeded the basic
medical
takaful
certificate's
limit.
As she already exhausted the basic plan certificate's limit, the supplemental plan will kick
in. The plan will pay the medical bill as per the supplemental plan certificate's limit minus
a deductible. For example, the plan will pay 80% of the bill and the remaining 20% will be
borne by Pn. Sakinah.

Comprehensive

Major

Medical

Expenses

Comprehensive Major Medical Expenses Plan is a medical and health plan that provides
coverage for most types of medical expenses. It is similar to a basic Hospitalization and
Surgical Takaful Plan except for the imposition of a substantial deductible. Most major
medical plan begins paying benefits after the deductible is satisfied. The certificate's

deductible is considered satisfied as long as the participant individual can show evidence
of
having
incurred
and
paid
the
necessary
covered
expense.
Another important feature of major medical coverage is the concept of co-Takaful which is
the sharing between the Takaful operator and the participant of any covered expenses
that exceed the deductible amount. The Takaful operator always carries the bulk of these
expenses, usually paying 80% while the participant is responsible for the remaining 20%.
Other proportions (as stipulated in the particular certificate may also be used, such as
75/25.

Excess

Major

Medical

Expenses

Excess Major Medical Expenses is normally offered as a top-up of a major medical. Once
the claim exceeds the limits of primary major medical plan, the excess major medical
plan begins coverage.

Basis

of

Takaful

Coverage

Comprehensive Hospitalisation and Surgical Takaful is also called "As Charged" plan in Malaysia.
The certificate normally covers the actual amounts charged by the hospital, on top of the room
and board. However, Takaful operator may put a control mechanism by putting a limit of
compensation for each benefit. Some of the limits imposed by Takaful operator are Per Disability
Limits, Overall Annual Limits and Overall Lifetime Limit.

Group

Medical

and

Health

Takaful

Plan

Group Medical and Health Takaful plan is similar in cover to individual medical and health plan. It
is normally employer-sponsored coverage for business owners, employees and often for
dependents. The contribution for group medical and health plan is calculated based on the
characteristics of the group as a whole, such as average age and degree of occupational hazard,
unlike
individual
plan
where
each
person's
risk
potential
is
evaluated.
There are two types of Group Medical and Health Takaful Plan:
a. Contributory

Basis

Under this type of plan, employees contribute a portion of group Takaful contribution.
Normally this kind of plan requires participation of at least seventy-five per cent (75%) of
the eligible members of the group.

b. Non-contributory

basis

Under this type of plan, no contributions are required of the employees as all group
Takaful contributions are paid by employer. However, this plan requires full participation
of all eligible members of the group.

Hospitalization

Cash

Benefit

Takaful

Plan

This plan provides participants with daily cash benefit, should the participant be hospitalized due
to all causes, subject to the terms and conditions of the Rider. It can be offered as stand-alone
certificate or as riders to Family Takaful or Medical and Health Takaful plan.

Critical

Illnesses

Takaful

Plan

The plan provides protection against any of the specified critical illnesses. It is also known as
dread diseases Takaful. Upon being diagnosed with any of the specified critical illness, the plan
will
cover
the
participant
a
lump
benefit.
This plan is introduce as a stand-alone certificate or as a rider to a Family Takaful certificate.

Disability

Income

Takaful

Plan

Disability Income Takaful, is a plan that covers the beneficiary's earned income against the risk
that a disability will make working, (and therefore earning), impossible. It includes paid sick leave,
short-term disability benefits, and long-term disability benefits