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Why Socially Conscientious People Choose Takaful

BY Team Loanstreet

Updated 19 Oct 2018

In this article, we explain the concept of mutual cooperation, the greater good, and how individuals can get a sense of helping each other as well as supporting charities through Takaful.

What's covered in this article?


Takaful might have been around in Malaysia for a while now, but its features as an alternative to conventional insurance is only now coming to light. Since its humble beginnings, a completely new segment of customers has emerged for Takaful - socially conscientious people. This segment of customers does not adhere to classic market segmentation parameters. They span both genders, across all income brackets, and most importantly, is not skewed towards any particular race. Thus it can be hard to describe exactly what characteristics represent this particular demographic. The one thing they all share in common it that they all profess to be socially and morally conscientious.

Weird you think? It turns out that this is not an isolated case. There have been precedents in other industries.

For example, The Body Shop has accomplished this in the vanity products industry. Instead of marketing how good / classy / desirable their products are, they buck the trend and boldly use fair trade practices that compensate small-business holders and cottage industry workers fairly as their marketing message. In the minds of their customers, it justifies The Body Shop’s higher prices, and customers are willing to pay to support such a cause.

Or think of the Vegan movements that preach individual responsibility towards the environment when making our food choices. How many people choose to go vegan despite the significant inconvenience it visits upon their lives, and the higher price they pay for dietary supplements? This is simply because they feel a certain sense of responsibility to a cause bigger than themselves.

If this has happened in other industries before, the question then is, why of all places, would such socially conscientious customers flock to Takaful products?

Ethically Practical

Looking at the growth that this socially conscientious group has undergone throughout the developing world, it may only be a matter of time until the same happens in Malaysia. Coupled with the evolving consumer education platforms and tools we have, Takaful is increasingly becoming the insurance choice as the younger, more discerning consumer groups grow.

It is little wonder why Takaful is being turned to in this respect; it doesn’t just preach religious principles – Takaful has managed to adapt those very principles into practical insurance mechanics in the modern world. In essence, individuals cooperate among themselves with the aid of the Takaful operator for mutual assistance and not for profit, thus adhering to the principle of ta'awun.

For example, the premiums are not given by the participants in the interest of profit, but as a donation that enables the participant to fulfil his or her obligation of mutual aid. Additionally, when any Takaful fund experiences a deficit during its operation, its shareholders  will extend an interest-free loan to the fund, keeping it afloat. When the deficit disappears, the amount loaned is then deducted, returning it to status quo. Another thing to note is that the Takaful operator pays zakat on behalf of the shareholders, an element which does not exist in conventional insurance.

As a socially responsible choice in personal financial security, Takaful contains many elements that assist the needy while serving its purpose in a manner that maintains social integrity. Hence, many people, regardless of whether they are Muslim or not, do not mind paying a slightly higher premium when compared to conventional insurance, as long as it means that they can maintain their own integrity. Additionally, profits and a portion of monies for Takaful cover with no claim are returned in the form of cash back to the participants and the community.


Ultimately one’s choice, financial or otherwise, should reflect one’s personal principles and values. Many would seriously consider a moral-adhering policy that offers financial security and peace-of-mind, compared to conventional policies. If you have an insurance policy that you suspect is out-dated, or do not have one at all, this is the perfect opportunity for you to consider taking up Takaful. For more information on what Takaful can do for you, please visit


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About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


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