Definition of Sharia Insurance and its Benefits
Definition of Sharia Insurance and its Benefits
Basically, insurance is included in the classification of non-depository financial institutions, where non-depository financial institutions are financial institutions that are not allowed to collect funds from the public in the form of deposits. (Deposits are time deposits that can be taken at a certain time).
Definition of Sharia Insurance:
- In Arabic, insurance is known as at-ta’min which is taken from ‘amana’ and means to provide protection, peace of mind, security, freedom from fear.
- So, at-ta’min is someone who pays or submits installments so that he or his heirs get a certain amount of money as agreed (in the contract), or to get compensation for his lost property. The meaning of “lost treasure” here is the treasure that we spend every month and one day the treasure will return to us. According to my understanding, insurance is the same as ‘investment’ or investment. However, investment is not to open a business or business. But for the guarantee of what we have insured, for example; We insure Home, Car, Health, Education, and others.
Sharia insurance is also:
- Mutual assistance agreements that do not contain Gharar (obscurity), Maysir (Untun-untungan), and Riba (interest system).
- It is a sharia-based investment fund with a profit-sharing system (Mudharabah).
The duty or role of the insurance company in sharia insurance is ‘Limited’, the insurance company is only the holder of the trust in managing and investing the funds obtained from the contributions of the participants who carry out the insurance. So in sharia insurance, the company only acts as an operational manager, and the manager cannot use these funds if there is no authorization (permission) from the participant. Therefore, participants can authorize insurance companies to manage these funds properly as stipulated in sharia.
Insurance Benefits:
- Sense of security and protection
- Fairer distribution of costs and benefits
- Insurance policies can be guaranteed to get credit
- Functions as Savings. here we can take the funds that we have invested in sharia insurance within a predetermined period of time.
- Risk submission tool, meaning to be aware of risks that will occur in the future.
- Help improve business activities
Thank you for reading the article about the Definition of Sharia Insurance and its Benefits.
