Application of Hibah Muʿallaqah for Retirement Annuity Plan

Abstract

It is widely understood that conventional insurance, despite its noble objective of providing a risk management instrument and offering “peace of mind”, is prohibited by the Sharīʿah as it is an exchange contract that contains substantial uncertainty (gharar) as well as features of gambling and ribā (interest). On the other hand, the Islamic alternative to conventional insurance, known as takāful, is established on the notion of mutual assistance (taʿāwun), mutual security and guarantee (taḍāmun) and mutual protection and assurance (takāful) between participants on the basis of brotherhood, deeply rooted in the concept of tabarruʿ, which tolerates the presence of jahālah (ignorance) and gharar (uncertainty) (Khorshid, 2004; Kasim, 2012; Bekkin, 2007).