Tabarru
The donation portion of a takaful contribution, paid into the risk fund to meet claims as mutual help.
Tabarru is the amount of a takaful participant's contribution paid to fulfil the obligation of mutual help and used to pay claims submitted by eligible claimants, according to IFSB-29. Framing the payment as a donation, rather than a price paid for cover, is what distinguishes takaful from a conventional insurance sale. The tabarru portion goes to the participants' risk fund, separately from any investment portion.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
TakafulMutual cover: participants contribute to a common fund, as donations, to help one another against specified losses.Participants' risk fundThe pool of donated contributions from which takaful claims are paid, owned collectively by participants and managed by the operator.Participants' investment fundIn family takaful, the fund holding participants' savings and investment contributions, owned individually by each participant.GhararExcessive uncertainty in a contract, about the object, price, quantity or delivery, which can make the contract invalid.