Note: This is a touchy issue, and may touch the raw nerves of a few people. If you will like to clarify on the matter, do it in a tactful and respectable manner at http://helmihakim.com/insurance/is-there-such-thing-as-halal-insurance-in-singapore/.
My blog attracts hundreds of visitors every single day and it is open for all.
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First and foremost, I will like to make it clear that, I try not to dodge on this issue, as 70% of my RSS subscribers are Non Muslims riskofhighunsubscriberate, but I will like to offer my transparent perspective on this. (this might be an interesting read for you too)
I am not an ustaz or a religious leader. Neither am I, a scholar or an academician.
…but I do qualify myself, as a Malay/Muslim financial consultant in Singapore. In my 4 years of practice, I have done 4 death claims, and numerous hospitalisation claims. All are Muslims. I talk to people on the ground, every single day on financial planning.
The question that I will like to answer today, is there such a thing as halal insurance in Singapore?
There are many strong views on this, and all are entitled to your opinion. I am offering you mine. You can subscribe to it or you can choose to reject it….but do read on….
1) Takaful Plans
In Singapore, you might have heard about Takaful plans. Takaful plans are offered by 2 entities, a cooperative and a commercial bank.
Unlike Takaful plans in Malaysia, Indonesia or other Muslim countries, Takaful plans in Singapore, is basically an investment plan also known as Investment Linked Policies. It is an investment plan that invests your money in a fund, called Takaful fund. It is a shariah compliant fund and the plan comes with insurance coverage. Should death, total permanent disability or 30 critical illnesses were to strike, halal money from the Takaful proceeds will be given to the beneficiaries.
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Takaful is good, but not for all. This is because, Takaful is an investment plan. A responsible financial consultant, will not recommend an investment plan, to a conservative 50 year old Pakcik (uncle), looking forward for his retirement.
Neither, will he recommend the investment plan, for one who has a short term horizon of say, 5 years or one who is risk averse.
Nor, will he treats Takaful investment plan, as a “one size fits all solution” to all his clients, because Takaful investment plan does not cover many things, example, hospitalisation.
He must educate his clients, that Takaful is an investment plan, that offers coverage and returns subject to the performance of the fund. ifnotyoulosemoneyclientwillfindyoulater
In Singapore, under section 27 of the financial advisors act, a financial advisor must determine the “risk profile” of the client before recommending him, financial instruments. If our client are able to take a bit of risk, Takaful investment plan is the solution to it.
So, if one is risk averse, how do we go about it?
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2) Cooperative insurance is the alternative.
When I recommend a life insurance policy to a client, I will give him choices. How do you want to get yourself covered?
Takaful Investment Plan with coverage? OR….. Cooperative Life Insurance?
There is a fatwa by MUIS, specially for the Muslim community in Singapore, on the permissibility of getting cooperative insurance in Singapore.
http://www.muis.gov.sg/cms/oomweb/fatwa.aspx?id=14384
Excerp from the fatwa,
“(i) Insurans yang ditadbirkan oleh syarikat kerjasama yang dianggotai oleh semua anggota-anggotanya untuk menjaga maslahat mereka dan apa yang diperlukan oleh anggota-anggotanya dari segi bantuan dan perkhidmatan, adalah seperkara yang diakui oleh syarak dan ia dari jenis bantu-membantu dalam kebajikan.
(ii) Begitu juga insurans syarikat mirip kerjasama (kooperatif) bagi maslahat masyarakat umum dan apa yang termasuk di dalamnya dari perkara seperti pengangguran, keuzuran, umur tua, kemalangan waktu bekerja dan yang seumpamanya, pihak konferensi telah memutuskan jenis insurans seperti ini adalah diharuskan. Dari itu ternyata bahawa insurans jenis kooperatif sahajalah yang dibolehkan oleh persidangan ulama antarabangsa itu.
Ini bererti juga bahawa insurans yang dikelolakan oleh syarikat-syarikat swasta yang bertujuan untuk mendapat keuntungan peribadi atau untuk faedah segelintir manusia telah tidak dapat pengakuan daripada para ulama yang menyertai persidangan Islam antarabangsa ini.”
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I shall not go in details, the need of having such fatwa in Singapore. Nevertheless, this fatwa is helpful, to serve as an advice, for many Singaporean Muslims, in need of insurance, but do not know if they can get it.
Hospitalisation bills are enormously expensive? If no insurance, how?
Takaful Investment Plans are good, but I am risk averse. I need insurance, how?
Car insurance in Singapore is mandatory? If no insurance, how?
Answer: If you are living in Singapore, and you need insurances that Takaful Investment Plan does not offer, like hospitalisation insurance, car insurance, business insurance, mortgage protection insurance, property insurance, travel insurance, pet insurance, Do Get It From A Cooperative.
At the end of the day, the choice is yours! Wassalam….. 
16. November 2011 at 9:27 pm
Is it possible for Singaporean to get insurance from Malaysia?
17. November 2011 at 12:08 am
Frankly, I am not sure, if a Singaporean can get insurance from Malaysia, or the specifics and clauses involved.
However, for sure, foreigners cannot get insurance from Singapore. They can only get insurance in Singapore if they are either employment pass or S Pass holder with a residential address in Singapore.
…and if they do apply, example hospitalisation insurance plan in Singapore, they can only claim hospital bills from hospitals in Singapore.
I believe, it works the same way, if a Singaporean wants to apply insurance in Malaysia.
5. February 2012 at 3:33 pm
Hi, I just graduated and am considering a job as a financial consultant. However, my family and alot others discourage me as they tell me that selling insurance is wrong in Islam as it involves interest. What are your views on this?
13. February 2012 at 1:39 pm
Congratulations! You have just graduated and are ready for your next phase of life.
As elucidated on my post earlier, as a financial consultant, you have a choice to market Takaful investment. It is an investment plan that invest your money in Takaful fund, which is 100% shariah compliant. The plan comes with insurance coverage, and should the insured dies, money from the Takaful fund will be given to the beneficiaries. There is no involvement of interest here.
Question: What if your client, is risk averse, and dont want investments?
Alhamdulillah…You can promote cooperative insurance. Cooperative insurance does not involve interest. Cooperative insurance involves bonuses.
By law, under the cooperative act, cooperative needs to share profits with the policyholders, your future clients. If cooperative makes more money, they share it, with the policyholders.
….and cooperative insurance is also transparent. The yield of your policies are disclosed in the local newspapers, like Straits Times, Berita Harian, Lianhe Zhebao and Tamil Murutsu, every year.
Being a financial consultant, is a noble and well respected profession. If you love to join us, do email me at helmihakim (@) hotmail.com
Looking forward to hear from you soon!
14. July 2012 at 10:28 am
Takaful investment is for long term or short term? Takaful investment is only available with hsbc bank? Or ntuc income? Pls advised in details..
Can u explain which insurance policy is not accepted in islam..? U can email me the details.. Thks
14. July 2012 at 11:19 pm
Salam Hidayah.
Takaful investment is for long term. I recommend my clients who have an investment time horizon of at least more than 10 years, to invest in Takaful fund.
Takaful Investment is available via HSBC and NTUC Income Cooperative.
Insurance per se is not haram. Insurance becomes haram when there is an element of riba. Takaful fund is a shariah compliant fund which emphasize on profit sharing, and does not contains elements of riba. It also does not invests in pork, gambling or any haram activities.
In Singapore, it is compulsory for financial advisors to evaluate client’s risk profile prior to recommending them investment plans. Personally, if client have the time horizon and can take risk, I will recommend them, Takaful Investment Plan with insurance coverage.
If not, I will propose cooperative insurance.
Another 2 factors that makes insurance haram are Maysir and Gharar.
Example of Maysir (gambling). I buy insurance, I pay so little, I die, get a lot of money.
Example of Gharar (uncertainty). I buy insurance, I dont know, will claim or not.
As for the factor of maysir (gambling) and gharar (uncertainty), they are being remedied if the instrument is provided by a cooperative. The foundation of a cooperative is donation, mutual support, helping each other out, when in need or in hardship due to the peril or hazard that befalls them.
As for HSBC Takaful Investment plan, it is also structured as contract of donation.
Surah al-Maidah, verse 2, reads to the effect:
“Help (ta’awun) ye one another in righteousness (birr) and piety, but help ye not one another in sin and rancour, fear Allah, for Allah is strict in punishment”.
14. July 2012 at 11:50 pm
Indirectly it means dat life insurance is haram. Correct? It’s like putting some value to your life.
Usually saving plans and investment plan with other insurance company or even banks will tag along with some insurance coverage.. It will help to settle premium n also give some cash to family in case of death or permenant disability of the insurer.. With high standard of living in Singapore, we do need some kind of protections for ourselves n family.. So takaful investment, does it work that way too? E.g invested $100 a month for 10yrs but with insurance protection of $100k in case of death and permenant disabilities?
15. July 2012 at 8:57 am
A financial instrument, either savings, investment or insurance plan is halal, if it is free from riba, maysir and gharar.
On the specifics of the plan, it is best that we can meet up and I will explain to you further. I have emailed you my contact number, and appreciate your reply for an appt. Insya’Allah.
26. July 2012 at 7:43 pm
Salam. Need advise with regard to some insurance matter. Pls forward hp no via the e-mail address given.tq
27. July 2012 at 5:21 am
Waalaikumsalam Sis. I have forwarded my hp number to your email address.
My contact number is 96520134. You are welcome.
30. August 2012 at 1:49 pm
Assalamu’alaikum brother.
The Fatwa is in relation to group company insurance right? So in what way are the principles of co-operative insurance from NTUC Income different from other companies, say Prudential, Great Eastern, etc.?
30. August 2012 at 4:56 pm
Waalaikumsalam Bro Muhammad.
The question in the Fatwa is on group insurance, but the explanation covers on the basics, whether can you get insurance, or can you not. I am applying the fatwa
in Singapore’s context.
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…and from this excerp,
“Begitu juga … insurans syarikat mirip kerjasama (kooperatif) bagi maslahat masyarakat umum dan apa yang termasuk di dalamnya dari perkara seperti pengangguran, keuzuran, umur tua, kemalangan waktu bekerja dan yang seumpamanya, pihak konferensi telah memutuskan jenis insurans seperti ini adalah diharuskan. Dari itu ternyata bahawa insurans jenis kooperatif sahajalah yang dibolehkan oleh persidangan ulama antarabangsa itu.
Ini bererti juga bahawa insurans yang dikelolakan oleh syarikat-syarikat swasta yang bertujuan untuk mendapat keuntungan peribadi atau untuk faedah segelintir manusia telah tidak dapat pengakuan daripada para ulama yang menyertai persidangan Islam antarabangsa ini.”
We can deduce that you can get insurance from a cooperative.
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and if you were to read,
“Oleh kerana Skim Insurans Berkumpulan ini tidak dapat dipastikan sama ada termasuk dalam insurans jenis kooperatif ini atau pun bukan, maka Jawatankuasa Fatwa berpendapat bahawa masalah ini terpulang kepada diri masing-masing untuk memilih pendapat yang mana satu yang perlu bagi dirinya.”
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….which suggests the importance to find out if the group insurance is from a cooperative or not…and if there is no means to confirm, the individual will be left to make judgement.
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My stand as of my explanation in the blog post, my first priority is to promote investment in Takaful fund, which is 100% shariah compliant.
Risk is being measured by standard deviation. If the client risk profile can accept standard deviation of at least 30% and above, I recommend Takaful Investment. If not, I propose cooperative insurance.
If what client need is not covered by Takaful investment plan, I will also propose cooperative insurance. An example will be hospitalization plan to cover hospital bills.
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How is cooperative insurance different than commercial insurance companies?
Cooperative insurer advocates profit/risk sharing (as per cooperative act), transparency (disclose policy yields every year in the local papers) and most importantly, the fundamental foundation of cooperative is donation, mutual support, helping each other out, when in need or in hardship due to the peril or hazard that befalls them which is consistent with what is being encouraged in Islam.
Surah al-Maidah, verse 2, reads to the effect:
“Help (ta’awun) ye one another in righteousness (birr) and piety, but help ye not one another in sin and rancour, fear Allah, for Allah is strict in punishment”.
As this is a public domain, and myself representing a cooperative insurer, I choose not to talk infavourably about other insurance companies, and I hope you respect my decision.
Thanks Bro for the enquiry.
4. October 2012 at 5:17 pm
Assalamualaikum Brother,
Happened to chance upon this write up while looking up on insurance. You mentioned that “Cooperative insurer advocates profit/risk sharing (as per cooperative act)”.
My understanding is that the pool of money collected as a cooperative is eventually invested by the insurance company. I wish to clarify, are we able to find out what investments are made with the fund that is collected. Since you’ve mentioned that the profit will be shared and also the fund is used for disbursement, knowing where the pool of money is invested in would determine the permissibility of it right? Unless there is a governing body which oversees the investment of the fund through sharia means, would there be an assurance that it is fully sharia compliant?
Are you able to clarify? Thanks. =D
4. October 2012 at 9:51 pm
Waalaikumsalam Brother,
First let me make it clear, that the first choice of every Muslim in Singapore is to get Takaful Investment Plan.
Takaful fund invests in shariah compliant funds and catered specially for Muslims. The underlying stocks invested in the fund is available for everyone’s perusal.
As long as the Contract is gratuitous in nature, or structured as a form of
donation, Maysir and gharar are remedied.
As expained in the above comments, the structure of cooperative fulfills that, and clients can sign an Aqad form to substantiate and confirm that in writing.
http://www.income.com.sg/forms/others/Declaration-AQAD.pdf
However, as a responsible Muslim financial planner, we need to ensure that what client needs is fulfilled by the plans that they undertook, in consistent with their risk profile and time horizon.
Example for hospitalization insurance plan. Or disability insurance plan. If its not covered under Takaful, we recommend cooperative insurance.
There is no specific ways for us to find out, where the cooperative keeps the money for premiums collected for such insurance. What we know for sure, is cooperative sets aside reserves to pay out claims when needed.
An analogical example, that i can give you is like you going to a doctor, when you are sick… You pay money and the doctor gives you panadol… The panadol cures you, but we are not able to ascertain, for sure what the doctor spend on, using the money that you gave him.
You already donated your money for the insurance policies. If nothing happens to you, Alhamdulillah, the premiums you pay, will help benefit others who are in need. You are doing a good deed.
If something happens to you, money from the pool/reserves, will be used to help you, at the time when help is most needed.
This is consistent with Surah al-Maidah, verse 2, which reads to the effect:
“Help (ta’awun) ye one another in righteousness (birr) and piety, but help ye not one another in sin and rancour, fear Allah, for Allah is strict in punishment”.
Functions of cooperative, involves risk/profit sharing. An example, recently, for our disability insurance plans, due to low claims, we are able to give rebates in the form of discount on premiums for our policyholders…. We share the risk/profits with the participants of the plans.
Hope that answers your question. Insya’Allah..
25. December 2012 at 6:34 pm
Assalamu’alaikum
Thank you for the article. I have invested in takaful since 2008.
However, I am not so clear as to what is meant by a cooperative. I hope that you can help me with my queries.
I have recently signed up for a hospitalization insurance with NTUC income with an assist rider plan. Is this considered a cooperative insurance?
I also travel very often and have been consistently buying travel insurance from Chartis. Is my travel insurance considered a cooperative insurance?
Once again, thank you for writing this article. It has been such an eye opener for me. Thanks for taking the time to answer my queries.
26. December 2012 at 12:50 am
Waalaikumsalam Sis,
Congratulations and thank you for supporting shariah compliant funds in Singapore.
In Singapore, there is only one cooperative insurer, that is NTUC Income Cooperative. The rest of the insurers are known as commercial insurance companies.
Thus, all insurance plans underwritten and managed by NTUC Income, I conclusively term it as cooperative insurance. This includes the hospitalization insurance plan with an assist rider plan that you recently signed up with NTUC Income. Thanks for your enquiry.
12. January 2013 at 11:24 pm
Assalamualykum warahmathullahi wabarakathu.. i have recently come to know and is studying about Takaful. We would like to change all our loans say, housing, car and other insurance to the halal ones. I did’nt know HSBC and NTUC had Takaful in Singapore. (We are PR) Do they have housing loans as well?
13. January 2013 at 6:36 pm
Waalaikumsalam warahmatullah hiwabarakatuh.
As explained in my blog posts, in Singapore, there are only investment plans, that invest your money in Takaful funds.
As of now, there are no Islamic loans in Singapore, based on the principles of Murabahah. Do your part in supporting, investment in halal funds and Insya’Allah,
when the market players see the demand, they will work their way to introduce more shariah compliant instruments for the people of Singapore. Amin… Insya’Allah…
13. January 2013 at 8:57 pm
Salam brother Helmi
I am a lecturer in Iran, studying about Takaful in Singapore.
Would you pls introduce some experts there who have professional information both about the Takaful model and Experience as well as its Sharia’h compliancy issues? I thing I must travel to Singapore very soon. It will be kind of you if give me some information.
Best regards
13. January 2013 at 9:34 pm
Waalaikumsalam Hojjatullah.
Alhamdulillah. The web makes the world, very small indeed.
As I have not meet you before, I will appreciate you to send me an email, introducing yourself, and add me if you have a Linkedin profile, before introducing you, industry practitioners, well versed in Takaful model and experience as well as its Shariah compliancy issues in Singapore. My email is helmihakim@hotmail.com
It will be intriguing, because in the world, there are only 3 countries which have a full fledged Islamic financial system, that is your country, Iran, Sudan and Pakistan.
Appreciate your email. Wassalam.