An investment-linked takaful is a family takaful plan that combines investment and takaful cover.  
Your contribution gives you a takaful cover, which includes death and disability benefits, and also an investment in a variety of Syariah-approved investment funds of your choice.
 
Related Information

Dealing with takaful intermediaries

Investment-linked insurance

Making nominations

Concepts of investing
Managing your money
 
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  The investment-linked takaful will allocate your contribution in two parts. One part is your participative contribution (tabarru’) which is used to help the participants that need it most, as in the case of death or disability.

The rest of your contribution goes into buying investment-linked units. You can choose which Shariah-approved investment funds you want to invest in. The investment-linked units are then managed by the takaful operator, who in return receives a fee (ujrah) for its services.

If, during the period of takaful, you do not make a claim, you will receive a share of the surplus in the takaful fund, based on the pre-agreed ratio between you and the takaful operator. Your share of the surplus will be used to purchase additional investment-linked units.

Below is a simple example of how the surplus sharing works:

A takaful operator has a total surplus (S) of RM4 million and total general contribution (GC) of RM10 million. Your contribution (C) for the year is RM500. The pre-agreed ratio is 50:50. Your share of surplus will be as follows:
 
     
   
     
 
     
  There are several important items to consider when you are selecting an investment-linked takaful plan. Consider the following:  
     
  Takaful cover  
  Generally, your contributions provide takaful coverage for death and disability. However, you can extend the basic cover to include personal accident and critical illnesses with additional contributions.  
     
  Selection of investment fund  
  You are given a choice of investing in various investment funds. The investment-linked unit price fluctuates according to the value of its investment fund. As such, it is important that you select an investment fund that reflects the level of risk that you are comfortable with as the investment risk is borne solely by you, and not by the takaful operator. Past performance of the investment-linked fund may not be a reliable guide to future performance.  
     
Fees and Charges
  The takaful operator may impose fees and charges for their services such as fund management fee, service and surrender charges.  
     
 
   
  Fund management fee
  The fund management fee is charged annually while the service charge is to cover the costs in administrating your investment-linked takaful. You should find out the type of fees and charges involved and the manner they are charged.
 
     
  Fund switching  
     
 

Look for funds with switching flexibility. This flexibility allows you to switch your unit linked-fund from one investment fund to another.
   

Most takaful operators allow one switch per year without charging any switching fee. For additional switches, a small fee may be imposed.
 
     
  Cash value accumulation  
     
  Regular contributions investment-linked takaful may not accumulate adequate cash value during the early certificate years. This means that if you terminate the certificate during the early period, you may not get back any investment value.  
     
  Bid and offer prices  
     
 

The difference between the offer and bid price is called the bid/offer spread and is usually expressed as a percentage of the price, usually around 5%.
   

You will be provided with two prices: the offer price for selling units and the bid price for buying them back, much like unit trusts.
 
     
  Cooling period  
     
 

Remember you have a 15-day cooling-off period for you to decide whether you wish to continue with the investment-linked takaful after you have signed for it. If you decide to cancel your plan within this period, your takaful operator will refund the investment-linked units and the tabarru’ contributions less medical fees and underwriting expenses incurred in assessing the risk.
   

The value of the investment-linked units refunded would be based on the price in accordance with the certificate.
 
 
 
     
 
Before you put your money into an investment-linked takaful:
 
Think about the risks you are willing to take
Make sure you fully understand the risks involved
Do not make any decision based on past performance of the fund
Be prepared to have your money tied-up for a certain period
 
If you need more information:
 

Get professional advice from your takaful operator or your agent on the risks and benefits of a particular investment-linked takaful.
Read all the information provided carefully.
 
 
     
 
     
  When applying for a takaful plan :  
     
 
Do disclose all material facts on the risks to be covered.
Do read the 'Important Notice' on the Proposal Form.
Do answer all questions fully and accurately.
Do complete and sign the Proposal Form yourself.
 
     
 
Don't leave any question in the Proposal Form unanswered.
Don't use ticks & dashes to answer the questions requiring full answers.

Don't withhold or misrepresent any material fact. Otherwise, the plan issued will be void, meaning that the claim can be repudiated.

Don't sign any blank form.
 
     
  To ensure your takaful plan remains valid :  
     
 
Do comply with all the terms, conditions and endorsements of the certificate.
Don’t forget to pay the contribution within the terms allowed by the takaful operator.
 
 
     
  The takaful operator will pay you or your nominees, subject to the terms and conditions of your investment-linked takaful. However, following these steps will help your takaful operator process your claim faster.  
     
  In the event of a claim, notify your takaful operator as soon as possible.  
     
  For maturity claim  
  Provide the original copy of the family takaful certificate.  
     
  For disability benefits claim  
  Provide the original copy of the family takaful certificate and the doctor’s report.  
     
  For death claim  
  The nominee is required to provide the following documents:  
     
 
A certified copy of the death certificate
A photocopy of the deceased's identity card
Original family takaful certificate
Proof of claimant's relationship with the deceased
Other documents as requested by the takaful operator
 
     
  In this case, it is important to have a nominee, as it would make claims easier for your beneficiaries. Learn more on how to make nominations for your takaful and insurance plans here.  
     
  Redemption of investment-linked units  
  You have the option to sell your investment-linked units through:  
     
 
Partial Withdrawal
  The request can be made by completing a Partial Withdrawal Form stating the following options:
  - the number of units you want to sell; or
  - the cash value you require
   
Surrender
  You have to complete a Surrender Form if you wish to sell all of your investment-linked units. The value of the investment-linked units will be based on the price in accordance with the certificate.
 
 
 
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You can get professional advice from your takaful operator or agent on the risks and benefits of a particular investment-linked takaful, or for more information, please download our booklet on investment-linked takaful.