Friday, 14 August 2026Malaysia EditionSign in
Ledger & Signal

Tech and finance for Malaysia — financial literacy without the product pitch, and technology coverage that says whether it matters.

Insurance & Takaful

Takaful and insurance are not the same product with different branding

The structural differences change what happens when you claim, when you surrender, and when the fund runs a surplus.

Conventional insurance transfers risk from you to the insurer, which prices that risk and keeps the profit. Takaful pools risk among participants, with the operator managing the fund for a fee.

Where it shows up

Surplus. A conventional insurer's underwriting profit belongs to the insurer. A takaful fund's surplus may be distributed back to participants.

Investment of the fund. Takaful funds are invested according to Shariah screens, which excludes conventional interest-bearing instruments.

On default. The recourse structure differs, and it is worth asking specifically what happens if the risk fund is insufficient.

Neither is universally better. But "the same thing, Shariah-compliant" is not an accurate description of either.