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Family Takaful, your financial planning frontliners

Family takaful is a financial planning method that can be used in case of emergency

New registration for family takaful plan in 2018 has increased to 13.1% which translates to RM4.91 billion compared to RM4.35 billion in 2017. This statistic more or less depicted the increase in awareness amongst Malaysians on the importance of having a takaful protection. However, efforts to provide awareness need to be increased because the fact is takaful penetration rate is still low compared to conventional insurance.

The main factor that needs to be emphasised in takaful awareness is holistic financial planning. When we talk about takaful, we cannot run from discussing on consumer’s pocket matters. What does it mean by consumer’s pocket matter?

In this challenging life, with the addition of COVID-19, the main worry for consumer must be their pocket money. Questions like,

“Do I need to subscribe to takaful now?”
“Can I afford to pay the monthly commitment for takaful?”

There’s a saying that goes,

“Cost is what you pay, value is what you get”

When we understand correctly on the takaful concept, we will feel the beauty of having a takaful protection and will not hesitate to subscribe to it.

Takaful is donation

Part of the contribution that you pay in takaful will be divided into two accounts which are:

  1. Participant Risk Fund (Tabarru’ Fund)
  2. Participant Account ( Savings and investment)

A takaful contract is developed based on the concept of donation called tabarru`

Participant Tabarru’ fund

This is where the concept of donation is practiced. This fund is not collected only from you but contributed by all the participants who subscribed to takaful and put in one fund. This fund is called Tabarru’ fund. If one of the participants met with misfortune such as death or total and permanent disability, the money from this fund will be used to pay the claims for that participant.

Isn’t that a beautiful concept? You not only help yourself and your family, but you mutually agree to help others in one aqad.

Participant account

Besides that, part of the contribution will be credited to Participant Account for the purpose of investment where the profits will be shared amongst the Participants and Takaful Operator based on an agreed rate.

Covered events under family Takaful plan

  1. Death
    Death is unavoidable and certain. We don’t know when and how will it happen to us. More so for a breadwinner who is the source of income for the family.

    Early or unexpected death than the average human lifespan has a great financial impact to a family. This is because the heirs are required to shoulder the responsibility of supporting the family members by unexpected death.

    The death benefit from the Takaful Family plan can be a huge assistance to assist loved ones to continue living their lives comfortably if the breadwinner is no longer around.

  2. Total & permanent disability (TPD)
    Besides death, other factor that can cause decrease in income for breadwinner is total and permanent disability. This disability may be caused by injury due to critical illness or accident.

    When this happens, most employer will cease their employment because they are not able to give full commitment to their work anymore. Hence, this will cause loss of main income to the family if this happened to the breadwinner.

    With TPD benefit, the family takaful plan can lessen the burden that has fallen to the participant’s family.

  3. Healthcare through medical and critical illness plan
    Increasing hospital cost treatment due to inflation and hospital equipment cost are worrying. The bill is not cheap and can be up to hundred and thousands of ringgit.

    Although you may have done enough preparation financially, sooner or later your savings will be depleted. It is worst to those who have not done any preparation at all. This will force some of us to be in debts here and there to cover the high cost treatment.

    With critical illness and medical benefits, the family takaful plan can be your frontliner before you touch your savings.

    Medical and critical illness plan will help to solve the problem and give the participants peace of mind knowing that their healthcare needs are taken care of when it is needed.
critical illness coverage helps to support your financial needs during treatment & recovery

There are many more functions and benefits in family takaful such as legacy planning, debt settlement and asset planning in the event of participant’s death. However, the three functions mentioned above can help to solve the main risks that most people encounter.

In the financial planning context, there is no use for you to do investment without managing the risks that you may face. Improper planning can cause severe profit loss in an instant.

When you understand the benefits and its many values, you would not hesitate to subscribe to a family takaful plan. Remember, family takaful plan is your frontliner, your holistic financial protector.


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