A simulation model for the determination of tabarru' rate in a family takaful

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The concept of tabarru' that is incorporated in family takaful serves to eliminate the element of uncertainty in the contract as a participant agree to relinquish as donation certain portion of his contribution. The most important feature in family takaful is that it does not guarantee a definite return on a participant's contribution, unlike its conventional counterpart where a premium is paid in return for a guaranteed amount of insurance benefit. In other words, investment return on contributed funds by the participants are based on actual investment experience. The objective of this study is to set up a framework for the determination of tabarru' rate by simulation. The model is based on binomial death process. Specifically, linear tabarru' rate and flat tabarru' rate are introduced. The results of the simulation trials show that the linear assumption on the tabarru' rate has an advantage over the flat counterpart as far as the risk of the investment accumulation on maturity is concerned.

Original languageEnglish
Title of host publicationAIP Conference Proceedings
PublisherAmerican Institute of Physics Inc.
Pages449-452
Number of pages4
Volume1602
ISBN (Print)9780735412361
DOIs
Publication statusPublished - 2014
Event3rd International Conference on Mathematical Sciences, ICMS 2013 - Kuala Lumpur
Duration: 17 Dec 201319 Dec 2013

Other

Other3rd International Conference on Mathematical Sciences, ICMS 2013
CityKuala Lumpur
Period17/12/1319/12/13

Fingerprint

simulation
death

Keywords

  • Actuarial equivalence
  • Contribution
  • Mortality
  • Mudharabah
  • Tabarru' fund

ASJC Scopus subject areas

  • Physics and Astronomy(all)

Cite this

Ismail, H. (2014). A simulation model for the determination of tabarru' rate in a family takaful. In AIP Conference Proceedings (Vol. 1602, pp. 449-452). American Institute of Physics Inc.. https://doi.org/10.1063/1.4882524

A simulation model for the determination of tabarru' rate in a family takaful. / Ismail, Hamizun.

AIP Conference Proceedings. Vol. 1602 American Institute of Physics Inc., 2014. p. 449-452.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Ismail, H 2014, A simulation model for the determination of tabarru' rate in a family takaful. in AIP Conference Proceedings. vol. 1602, American Institute of Physics Inc., pp. 449-452, 3rd International Conference on Mathematical Sciences, ICMS 2013, Kuala Lumpur, 17/12/13. https://doi.org/10.1063/1.4882524
Ismail H. A simulation model for the determination of tabarru' rate in a family takaful. In AIP Conference Proceedings. Vol. 1602. American Institute of Physics Inc. 2014. p. 449-452 https://doi.org/10.1063/1.4882524
Ismail, Hamizun. / A simulation model for the determination of tabarru' rate in a family takaful. AIP Conference Proceedings. Vol. 1602 American Institute of Physics Inc., 2014. pp. 449-452
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