Sabtu, 20 November 2010

The Benefits of Conventional Insurance

Insurance benefits society by allowing individuals to share the risks faced by many people. But it also serves many other important economic and societal functions . Because insurance is available and affordable, banks can make loans with the assurance that the loan’s collateral (property that can be taken as payment if a loan goes unpaid) is covered against damage. This increased availability of credit helps people buy homes and cars. Insurance also provides the capital that communities need quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes .

Insurance itself has become a significant economic force in most industrialized countries. Employers buy insurance to cover their employees against work-related injuries and health problems . Businesses also insure their property, including technology used in production, against damage and theft. Because it makes business operations safer, insurance encourages businesses to make economic transactions, which benefits the economies of countries . In addition, millions of people work for insurance companies and related businesses. In 1996 more than 2.4 million people worked in the insurance industry in the United States and Canada .
Insurance companies perform a type of monetary redistribution they collect premiums and eventually redistribute that money as payments. Depending on the type of insurance, redistribution can take anywhere from a few months to many decades. Because of this delay between collecting and paying out funds, insurance companies invest their funds to bring in extra revenues. Such investments help businesses and governments finance their operations, and profits from those investments support the operations of insurance companies . With these investment earnings, insurance companies can keep rates much lower than would otherwise be possible.

Jumat, 19 November 2010

1. The Contract of Islamic Insurance

In the contract of Islamic Insurance, the forbidden elements of business contract are eliminated; hence, the Islamic Insurance is legal on the hand of shari'a. To eliminate those elements, there are terms in Islamic Insurance, they are:
a. The Contract ('Aqd)
The clarity of contract in mu'amalah practices is principal, it fixes the legality of trading. The insurance is likewise, the contract between two parties, insured and company, must be clear. In its contract Islamic Insurance is based on takafulli (mutual responsibility) principle with tabarru' intention , it is the mutual responsibility intention between the participants of insurance to shift the burden of others. The Islamic jurists consider al-aqd at-takafuli as the safest contract to eliminate riba, gharar, maisir and jahala.
Based on this 'aqd, the Islamic Insurance divides the first year policyholder's premium into two accounts, participant's account (saving account) and participant's special account (charity account). The first is invested in profit lost sharing system and the later is contributed as the tabarru' .
b. Tabarru'
As the result of the charity account, it is accumulated amount of worship fund which called by tabarru'. Etymologically, the word Tabarru' means contribution or donation .
Tabarru' is purposed to give the virtuous fund sincerely to help each other and every participant shall agree to give away this tabarru' a certain proportion or the full amount of his or her contribution for this purpose. And the financial assistance paid to the participant resulting from the defined loss comes from this fund.