Introduction
Many drivers get confused when it’s time to renew their vehicle protection: should you choose Takaful or stick with conventional insurance? Both are legally approved in Malaysia by Bank Negara, but they differ significantly in concepts, operations, and benefits. This article breaks down the Takaful vs conventional insurance comparison so you can make a more informed choice.
Quick Comparison Table
| Aspect | Takaful Malaysia | Conventional Insurance |
| Concept | Based on mutual assistance (tabarru’) | Based on risk transfer contract |
| Fund Management | Pool owned by participants | Fund owned by the insurance company |
| Profit | Shared back with participants (if surplus) | All profit goes to the company |
| Shariah Compliant | Yes, free from riba/gharar/maisir | No, not Shariah-compliant |
| Popularity | Favored by Muslim users | Widely used by all drivers |
What is Takaful?
Takaful is an Islamic-based financial protection system. Participants contribute to a common fund, which is used to assist other members when accidents or losses occur. Any surplus at the end of the year can be redistributed to participants.
What is Conventional Insurance?
Conventional insurance works as a contract between you and the company. You pay a premium, and the company assumes the risk. If there are no claims, profits remain with the company, not the participants.
Advantages & Disadvantages
Advantages of Takaful
- Shariah-compliant, free from riba
- Mutual help / solidarity principle
- Potential redistribution of surplus contributions
Disadvantages of Takaful
- Premiums can sometimes be higher than conventional insurance
- Fewer product options compared to conventional insurers
Advantages of Conventional Insurance
- More variety of companies and packages
- Discounts and promotions available
- Claims process may be faster (depending on the company)
Disadvantages of Conventional Insurance
- Not Shariah-compliant
- Profits solely for the company, no surplus sharing
When to Choose Takaful
- Shariah compliance is a priority
- If you prefer fairness through surplus distribution
- If you support the mutual assistance concept
When to Choose Conventional Insurance
- You’re Not Concerned with Syariah compliance
- If you want more package and pricing options
- If claims speed is your priority (depending on the company)
How to Compare Prices
Whether you choose Takaful or conventional insurance, you can check prices online via:
- BJAK – Malaysia’s largest insurance & Takaful comparison platform
- MyEG, JPJ, MyJPJ – to check and renew roadtax along with insurance
- Pos Malaysia – for physical roadtax renewal
Conclusion
In the end the choice between Takaful vs Conventional insurance entirely depends on the users who wish to purchase their vehicle insurance whether it be for personal values and budget. If you value principles you can opt out for the Shariah compliant insurer. Whereas flexibility in pricing from conventional insurance may suit your budget needs better. Lastly, whatever you choose must always be done wisely, so do compare first using platforms like Bjak to get the best coverage price.
Read More:
How to Avoid JPJ Fines at a Roadblock
Difference Between a Car Insurance Cover Note vs Full Policy
