At the opening of World Islamic Economic Forum (My highlight of global crisis was about smallholders farmers of palm oil suffered from decreasing commodity prices. Another highlight shows how some vulnerable groups of people are facing the risk of global crisis.) in Jakarta weeks ago, almost every speaker talked about the excesses of irresponsible financial market for triggering the global crisis.
The forum was touted Islamic finance as a framework for a more stable global financial system. What are the differences with conventional, traditional or western financial system? And what is the relation with life insurance?
The most principle of Islamic finance is about interest. Under Islamic finance, making money from money, such as charging interest, is not permitted. Wealth should be made only through legitimate trade and investment in assets. But not l all investments are permitted. Companies engage with gambling, alcohol and pornography is forbidden.
Life insurance is one of the products of traditional finance. Not all products of traditional finance are provided in Islamic finance. In UK, The Islamic Bank of Britain offers a Sharia compliant current account, mortgage and even personal loan. Even HSBC offers a Islamic current account and mortgage. Children’s Mutual is offering a Sharia compliant Child Trust Fund.
In Indonesia, Takaful –an insurance company associated with Muamalat –is pioneering in offering insurance.
Insurance is a ways the reduce risk of loss due to misfortune. Basically, insurance pools the resources to help who need. In the Islamic insurance there are no components of gambling and uncertainty.
Life insurance is one of common products. People may need life insurance since they have risks of loss. The insurance company who has policy owner will pay benefit to insurer if an insured event or risk of loss happens. Insured events covered by the policy are varying.
Protecting ours by life insurance may good options in the global crisis. Choose traditional finance or Islamic finance also an option afterward.
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