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Takaful Insurance

Conceptually this is similar to mutual insurance in that it involves a number of participants sharing risk on a cooperative basis. Islamic scholars generally agree that Takaful, which is based on the concept of Ta’awun (i.e., mutual assistance), is consistent with Shari’ah law. Shari’ah law prohibits a Takaful operator (effectively the insurer) from investing in investments which earn interest, and certain equity investments which are haram (i.e., forbidden), such as investments in companies involved in gambling, the manufacture or sale of alcohol, pork products, munitions, restaurants or hotels.