Sharia Education Insurance: What Programs Does It Include?
Sharia education insurance is a school-fee investment based on Islamic principles. See what it includes and how it differs from conventional plans.
Many insurance products are on offer today. Even so, sharia education insurance has become a hot topic among many groups over the past few years. This Islamic-principles-based education insurance exists to meet the needs and wishes of people who want an insurance product that complies with sharia rules.
According to the National Sharia Council of Indonesia, sharia-based education insurance is an effort in which a group of people protect and help one another through investment in assets (tabarru) that provide a pattern of returns to face certain risks, through a contract (akad) that complies with sharia. Under this system, participants donate part or all of their contributions, and those funds are used to pay claims if a participant in the sharia education insurance suffers a misfortune.
An insurer that offers a sharia-based education insurance program can also be described as handling only the operations and investment of the funds it receives. In how it is managed, however, this insurance has many advantages over conventional insurance. Here are some differences between sharia education insurance and conventional insurance:
Fund Management
Fund management in sharia education insurance is transparent, and the funds are used as fully as possible to benefit the policyholders themselves. In conventional education insurance, by contrast, the insurer sets the premium and other charges with the aim of generating the greatest possible income and profit for the company itself.
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Risk Management
Sharia education insurance manages risk on the principle of sharing of risk, meaning the risk is borne or shared between the company and the participants. Conventional education insurance uses the principle of transfer of risk, in which the insured (the policyholder) shifts the risk to the insurer, which acts as the guarantor under the insurance agreement.
Contract System
Sharia education insurance uses only a hibah or tabarru contract, which is grounded in the sharia system and can be considered halal. In conventional education insurance, the contract tends to resemble a sale-and-purchase agreement.
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