Tabarru' Fund and Surplus in Motor Takaful: How Does It Work?
When you contribute to motor takaful, part of your contribution goes into a shared fund called the Tabarru' Fund or Participants' Risk Fund (PRF). This fund helps pay eligible claims. If money remains after claims and other obligations are accounted for, a surplus may be distributed to eligible participants. However, receiving a surplus is not guaranteed.
- Last reviewed:
- Reviewed by:
- Compliance
- Shared fund: Participants contribute to a common fund to help cover eligible claims.
- Separate fund: The PRF is kept separate from the takaful operator's shareholders' fund.
- Fund deficit: The operator may provide an interest-free loan, known as qard, to cover a shortfall.
- Surplus: Eligible participants may receive a share if the fund has a distributable surplus.
How does the Tabarru' Fund work?
The Tabarru' Fund is a pool of contributions from participants. It is used to pay eligible claims and other obligations under the takaful certificates.
The operator manages this fund and charges a wakalah fee for its services. The remaining contribution is allocated to the takaful fund as tabarru'.
For example, the wakalah fee differs by operator and product:
| Operator | Example wakalah fee |
|---|---|
| Takaful Malaysia (myMotor) | 26% |
| Takaful IKHLAS | 30% |
These figures are based on specific product documents. Actual fees may vary, so check the latest Product Disclosure Sheet (PDS).
What happens when you make a claim?
If your claim is covered under your certificate, the eligible amount is paid from the Tabarru' Fund. The operator manages the claims process on behalf of participants.
What happens if the fund has a deficit?
A deficit happens when the fund does not have enough assets to meet its claims and other liabilities.
In this situation, the takaful operator must provide an interest-free loan called qard from its shareholders' fund to cover the shortfall.
Future surpluses may be used to repay the qard. Depending on the operator's policy, surplus distributions may continue, be reduced or be temporarily suspended while the loan remains outstanding.
Good to know
A fund deficit does not mean you have to pay an extra contribution to cover the shortfall.
Can you receive a surplus from motor takaful?
Yes, you may receive a share if the fund records a distributable surplus and you meet the operator's eligibility conditions.
The surplus is determined after accounting for claims, actuarial liabilities and other fund obligations. Any distribution must follow the operator's surplus management policy and applicable requirements.
How do takaful operators share the surplus?
The sharing arrangements differ between operators and products.
| Operator | Operator's share | Participant's potential share |
|---|---|---|
| Takaful Malaysia (myMotor) | 50% under Ju'alah | 50% as cash back for eligible participants |
| Takaful IKHLAS | Up to 50% of gross distributable surplus as a Surplus Administration Charge (SAC) | Remaining net distributable surplus |
| Zurich General Takaful (Z-Driver) | 50% under Ju'alah | 50% under Hibah for eligible participants |
These are examples from product documents, not guaranteed payouts. Actual distributions depend on fund performance, eligibility and the terms of your takaful certificate. Check the latest PDS and certificate wording for the applicable rules.
What should you know before expecting a surplus?
Keep these points in mind:
- It is not guaranteed
The fund may not have a distributable surplus every year.
- Claims can affect eligibility
Some operators only distribute surplus to participants who have not made claims or received benefits during the coverage period.
- A deficit can affect distributions
Future surplus may be used to repay outstanding qard.
- Do not skip a valid claim
A potential surplus should never be a reason to avoid making a claim you are entitled to.
Frequently asked questions
No. NCD is a discount on your contribution based on your claim-free record under the applicable NCD rules. A takaful surplus depends on the financial performance of the participants' fund and the operator's distribution policy.
No. A deficit is generally covered through qard provided by the takaful operator from its shareholders' fund. It is not an extra contribution charged directly to you.
Check your operator's latest Product Disclosure Sheet (PDS) and full certificate wording. These documents explain the surplus-sharing arrangement, eligibility conditions and how any distribution is made.
Compare motor takaful options on BJAK
Understanding how the Tabarru' Fund works can help you make a more informed decision when choosing motor takaful. Compare available options from participating providers, review their coverage and check the terms before choosing a plan.