Benefits and Advantages of Sharia Insurance Products
In general, the aim of insurance products is to provide a sense of security when facing life risks. Such as risks to health and life whose presence cannot be predicted.
For this reason, you have several insurance product options to protect you and your family, such as life insurance or health insurance , whether from conventional insurance or sharia insurance.
Before choosing the type of insurance you need, it’s a good idea to find out the advantages first. Such as the benefits and advantages of each insurance product available.
This time, let’s take a more in-depth look at sharia insurance products. Basically, sharia and conventional insurance both aim to provide protection when risks come to us. The difference is, sharia insurance provides an opportunity for policy holders to help each other in benevolence to other sharia insurance participants.
This is the advantage of sharia insurance products, namely mutual protection and helping others. So the policy owner does not only provide protection to himself as an insurance participant. However, you can also help others.
Benefits of Sharia Insurance
The following are the benefits and advantages of sharia insurance products.
1. Helping through the Tabarru’ Fund
The principle of mutual assistance ( takaful or ta’awun ) is carried out through asset investment or Tabarru’ . Tabarru’ is a form of contract carried out with the aim of benevolence and mutual assistance, not solely for commercial purposes. Tabarru’ is what differentiates and is an advantage of sharia insurance products. Tabarru’ funds deposited by sharia insurance participants will be used to help other participants if a risk occurs. Apart from getting the benefits of financial protection by helping each other, participants can also invest.
2. There is Distribution and Allocation of Underwriting Surplus
In sharia insurance, there is the term Underwriting Surplus . Underwriting Surplus is the positive difference in the total contribution of Participants into the Tabarru’ Fund after deducting compensation/claim payments, reinsurance contributions and technical reserves, in a certain period. This is not known in non-Shariah products.
In sharia insurance, the underwriting surplus can be distributed to several allocations. Namely to the Tabarru’ Fund , policy holders and insurance companies. Of course, the calculation is according to the percentage specified in the policy. If an Underwriting Deficit occurs , the Insurance company as the manager through the Qardh Agreement , will provide an interest-free loan from company funds to be channeled into the Tabarru’ Fund as a source of payment for customer claims.
Also Read : Recognize and Understand the Differences between Sharia and Conventional Insurance
3. There is a distribution of results according to the contract
The principle of sharia insurance products is that no party feels disadvantaged. Why? Because, this sharia insurance company is only a manager of participant funds. So if there is a profit from managing these funds, the results will return to the participants. So, both participants and sharia insurance companies will receive profit sharing according to the contract used.
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4. Riba Free
Usury comes from the term riba fadhl , which means excess ( fadhl ). Thus, riba fadhl is an excess or additional quantity in buying and selling transactions of similar goods, such as money, gold, wheat, or other objects, the amounts of which are not the same. Conventional insurance is categorized as containing usury because the amount of premium paid by the participant is not the same as the amount of the claim or compensation he receives. The handover between premiums and claims is not carried out at the same time. Investments contained in conventional insurance are also placed in ribawi instruments.
On the other hand, sharia insurance is said to be usury free because no participant funds are forfeited. Because, sharia insurance will provide customers with claims, compensation or underwriting surplus . Apart from that, incoming funds will be managed in investment instruments that comply with sharia principles, supervised by DSN-MUI and OJK. The investments offered at Sharia Insurance also use clear contracts so that participants are more comfortable.
Also Read : Getting to Know Types of Investment and How to Invest for Beginners
5. More Transparent
Fund management by sharia insurance companies is carried out more transparently both in terms of the use of insurance participant contributions, underwriting surplus and distribution of investment returns. When an Underwriting Surplus occurs , the Insurance company will divide it into three parts whose value has been stated in the contract. This profit sharing consists of the portion that goes to the Tabarru’ Fund , the portion given to participants, and the portion that will be given to the insurance company.
Profit sharing is also carried out proportionally. This means that participants who make a lot of contributions will also receive a lot of profit sharing. The provisions regarding profit sharing contained in the contract from the beginning of this agreement show that sharia insurance is transparent.
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6. Supervised by the Sharia Supervisory Board to ensure transactions comply with Sharia Principles
The Sharia Supervisory Board (DPS) supervises the fulfillment of sharia principles in the business activities of sharia financial institutions, including sharia insurance. This is possible because the DPS members are recommendations from the MUI National Sharia Council.
Apart from its role as supervisor, DPS also has the function of providing approval for transactions carried out by sharia insurance, so that they are in accordance with the principles of Islamic sharia. For example, determining what instruments can be used as an investment portfolio by sharia insurance.
Sharia Insurance Products
One sharia life insurance product that can provide these advantages is MiSmart Insurance Solution Syariah (MiSSION Syariah) from Manulife Indonesia.
This is a sharia insurance product from Manulife Indonesia which provides life protection, optimal investment and benefits at the end of the Sharia Life Insurance program in accordance with Islamic sharia principles.
The 3 in 1 solution (Life Protection, Investment and Health) will provide comfort and calm in facing risks.
Apart from that, MiSSION Syariah provides flexibility for participants to choose contributions according to their needs. MiSSION Syariah is also equipped with health insurance as additional insurance and total participant loyalty benefits of up to 750%.
So the benefits and advantages of sharia insurance products do not only provide protection and comfort in life. But you can also sow blessings and share with others with sharia insurance.