Life Insurance
Term life vs. investment-linked life insurance
Conventional life insurance is impermissible. Family takaful (Islamic life insurance equivalent) is permissible. Investment-linked takaful plans are permissible provided investments are in Shariah-compliant funds.
Full Ruling
Conventional life insurance is prohibited due to gharar and riba. Family takaful under BNM's Takaful Operational Framework is permissible. For investment-linked takaful: (1) The insurance (risk) component must be structured as tabarru' contribution. (2) Investment units must be allocated to Shariah-compliant funds approved by the operator's Shariah Committee. (3) Fees and charges must be disclosed transparently. (4) Savings/investment component may be withdrawn subject to contract terms.
Rationale & Reasoning
BNM's regulatory framework provides a robust Shariah governance structure for takaful operators in Malaysia. Investment-linked products structured under this framework satisfy Shariah requirements for transparency, risk-sharing, and halal investment.
Rule Basis (Daleel)
- 01BNM Takaful Operational Framework 2019
- 02Family takaful = family tabarru' + investment account
Conditions for Permissibility
- ✓Insurance component structured as tabarru'
- ✓Investment in SC-approved Shariah-compliant funds only
- ✓Full fee disclosure
Citations & Sources
Bank Negara Malaysia – Takaful Operational Framework
Bank Negara Malaysia · 2019
Ref: BNM/RH/PD 028-7