TLD Whitepaper
  • Part I: What is The LifeDAO?
    • Introduction
    • Mission
    • Background
      • Islamic finance and insurance
      • Why is conventional insurance not shariah-compliant?
      • Takaful, an Islamic alternative to conventional insurance
        • Takaful vs. Conventional Insurance
        • Takaful in light of the Shariah
    • The LifeDAO: Inspired by Takaful, native to the blockchain
      • Two Funds, Two Entities
      • Risk, Solvency and the Benefit Multiplier
      • Shariah compliance of TLD
    • The Takadao Protocol
      • Takadao’s Technology Stack
      • Takadao Reprotection Pool
  • PART II: The LifeDAO Membership
    • Member Journey
    • The LifeDAO Membership
      • Membership Benefits
      • Membership Privileges
      • Benefit 1: Benefit Payout
      • Benefit 2: Surplus Distribution
      • Benefit 3: Governance Rights
      • Privilege 1: Verifier Incentive Program (VIP)
      • Privilege 2: Contributor Committee
      • Privilege 3: TAKA Token Airdrops
      • Allocation of Membership Contributions
      • Benefits Payout Management
      • Governance and the Contributor Committee
      • Contributor Functions
        • Screen Proposals
        • Endorse and Advocate for Proposals
        • Implement Proposals through Multisig
      • The LifeDAO Investment Pools
        • Investment Conditions
        • Deposit and Withdrawal Mechanisms
        • Governance
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  1. Part I: What is The LifeDAO?
  2. Background

Takaful, an Islamic alternative to conventional insurance

PreviousWhy is conventional insurance not shariah-compliant?NextTakaful vs. Conventional Insurance

Last updated 9 months ago

Takaful is defined as “a scheme based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the for that purpose.”

In practice, a group of individuals pool funds together with the intention of providing financial assistance to one another as insurance against a defined risk. The intention, or niyah, is that of mutual aid and stems from the fact that the funds are contributed as donations, partial or full, for the specific purpose of insuring against risks. The funds are used to compensate the Takaful Operator (the company that manages the funds on behalf of the participants), to pay claims against adverse events, and invested for returns. In case there are funds remaining after these activities, they are redistributed back to the original contributors.

It is easiest to understand takaful in contrast to conventional insurance.

participants mutually agree to contribute