PS 3218 1.14 Family Takaful (Part 2)

Family Takaful (Part 2)

1. How are participants’ fund managed?

The Fund is divided into two accounts:

· Participant’s Account (PA)

· Participant’s Special Account (PSA)

2. How is the participant’s contribution apportioned or divided?

Age next birthday	10	15	20	25	30	35	40
18-25	2.0%	3.5%	5.0%	5.5%	7.5%	9.5%	12.5%
26-30	2.0	3.5	5.0	6.5	9.0	12.5	-
31-35	2.5	4.5	6.5	9.0	12.5	-	-
36-40	3.5	6.0	9.0	12.5	-	-	-
41-45	5.0	8.5	12.5	-	-	-	-
46-50	7.0	12.5	-	-	-	-	-
51-55	12.5	-	-	-	-	-	-

The division of his contribution depends on his/her entry age, length of year in participation (maturity period) and the type of plan he/she is taking (see Table above).

· For example, if he takes the takaful family plan and contributes at the age of 42-years for a 10-year maturity and death cover plan, his tabarru’ rate from the Table above is 5%.

· 95% goes to his PA account as his personal saving.

· 5% goes to PSA as his donation to the group welfare in accordance to the tabarru’ principle.

· All contributions will be invested in compliance with Islamic laws and principles to obtain profits.

· 70% of the profit will be credited to the participant’s account and 30% to the company in accordance to the Al Mudharabah principle.

3. If A is 20 years old now. He contributes $500 annually to a family takaful (death cover) plan which matures in 20 years. How much of his contribution goes to donation and how much goes to his savings with the company?

From the Table the Tabarru’ rate is 5%.

PSA = 5% of $500 = $25 as donation

PA = 95% of $500 = $475 to his saving

4. At the end of the year, the takaful company gives $40 as A’s share of profits. Calculate the amount of profit that goes to his PA?

PA = 95% of $40 = $38 credited into his savings.

5. Fill in the flow chart below for the participant with the particulars as:

· Age on next birthday = 41 years

· Term = 10 years maturity period

· Contribution per annum = $1200 paid on 1.1. 2009

· Tabarru rate = 5%

· Share of business profit (based on contribution of $1200) = $100

Takaful Contribution= $1200

PA (95%) = $1140 PSA (5%) = $60

Total family takaful fund = $1200

Share of business profit = $100

Participant’s share (70%) = $70 Takaful comanpy (30%) =$30

PA

$1140

$ 66.50 (95% of $70)

Total

$1206 (saving)

PSA

$60

$3.50 (5% of $70)

Total

$63.50 (donation)