7 Differences in Conventional and Sharia Insurance
It cannot be denied that insurance is needed by most people because insurance needs are very important because it provides protection to the owner of the insurance policy and his family. In the world of insurance there are also two choices of types of insurance, namely Islamic and conventional insurance. Along with the times, people not only recognize conventional insurance, but also sharia insurance.
The type of sharia insurance itself emerged in the mid-1990s with the name Takaful insurance which at the same time became a pioneer of Islamic insurance. And continues to grow until now. Islamic and conventional insurance certainly has a difference, then what are the differences between Islamic and conventional insurance? The following are some of them:
Terms of Agreement
The first is seen in terms of the agreement, for sharia insurance, the agreement uses a grant contract which also with more concepts to each other please help, together not to expect compensation. As for conventional insurance, the agreement system that is used can be said to be similar to a sale and purchase transaction, where all parties are together to be able to get and take advantage as much as possible and the smallest loss.
Seen From a Funding Side
Then the second is seen from the funds, where in the Takaful funds that are entered are owned by all insurance participants. Where the insurance company is only a fund manager and is not entitled to own. As for conventional insurance, premium funds that will be paid by the insurance participants will be the property of the company because they have the concept of buying and selling. Thus it is free to use anything as long as it is in accordance with the agreement.
Fund Management
Then for the management of funds, in Islamic insurance, the management of funds will be carried out as much as possible, which will be processed to be able to provide benefits to the insurance participants, in addition to its management is somewhat more transparent. As for conventional insurance companies will set premiums and other costs unilaterally. Examples are just like administration and others. This is to get the maximum profit.
System Used
The difference between Takaful and conventional insurance is also seen from the system used, wherein the Islamic insurance benefits obtained from managing the insurance fund will be shared for all participants and of course insurance companies equally. Whereas for conventional insurance the benefits obtained from the insurance activities will become the property of the insurance company completely.
Insurance Fund Supervision
Furthermore, it is seen from the supervision of insurance funds, for sharia insurance there is a Sharia Supervisory Board in every sharia-based insurance company. For his own task is to oversee the insurance company to always adhere to sharia principles in managing insurance funds. The DPS is also responsible to the MUI. While for conventional insurance supervision of insurance funds is only done internally, which is carried out by management and no outsiders can enter.
Status of Funds
Then for the fund status, in Islamic insurance, the funds deposited by the insurance participant can be taken if on the way they cannot afford to pay the premium again. In addition, there are only small pieces in the form of tabarru funds in this case. Whereas for conventional insurance if the insurance participant is no longer able to pay the premium, then all funds that have been deposited will have the status forfeited or become the full ownership of the company.
Type of Investment
In addition to the differences in Takaful and conventional insurance when viewed from the type of investment, Islamic insurance has a unit link insurance fund that can only be invested in fields that are considered not illegal. As for conventional insurance, these funds are free to be invested in any field as long as they have a large profit potential.