Here are some differences between conventional and sharia insurance:
Sharia insurance is based on the principle of cooperation and mutual help, where the insurer will jointly collect grant funds (tabarru) to help each other with other insurance participants in need (sharing of risk). Whereas conventional insurance applies a transfer of risk system, in which the risk will be transferred/charged by the insured (insurance participant) to the insurance company acting as the insurer in the insurance agreement.
The management of funds carried out in sharia insurance is transparent and will be used as much as possible to bring benefits to the insurance policy holders themselves.
Whereas in conventional insurance, the insurance company will determine the amount of premium and various other costs aimed at generating the maximum income and profit for the company itself.
In sharia insurance only a grant contract (tabarru) is used which is based on the sharia system and is confirmed to be halal.
Whereas in conventional insurance, the contracts carried out tend to be buying and selling
In sharia insurance, insurance funds are shared property (all insurance participants), where the insurance company only acts as a fund manager. Whereas in conventional insurance the premium paid belongs to the insurance company and the insurance company has full authority to manage and allocate the insurance funds
In sharia insurance, all profits obtained by the company related to insurance funds will be distributed to all participants. As for conventional insurance, all profits will be the right of the insurance company
Islamic insurance companies have an obligation for participants to pay zakat, the amount of which will be adjusted to the amount of profit earned by the company. Of course this does not apply in conventional insurance
In sharia insurance, supervision is carried out strictly and carried out by the National Sharia Council (DSN) which was formed directly by the Indonesian Ulema Council (MUI) and was given the task of supervising all forms of implementation of sharia economic principles in Indonesia, including issuing fatwas or laws governing them.
Where in every Islamic financial institution, there must be a Sharia Supervisory Board (DPS) which serves as a supervisor. Whereas in conventional insurance, the origin of the object being insured is not a problem, because what the company sees is the value and premium to be determined in the insurance agreement.
In some types of insurance issued by conventional insurance companies, there is a term called “scorched funds” which occurs in unclaimed insurance (eg life insurance where the policyholder does not die until the coverage period ends). But this of course does not apply in sharia insurance, because funds can still be taken even though there is a small portion that is admitted as tabarru funds.
There are many reasons why it is better to buy insurance online.
The process is done online. All processes from the beginning of the transaction request program status updates and checks are done online (in the integrated system) which can save you time by comparison. You need to go to the bank or through an insurance company. Reduce insurance premiums:
It is cheaper to apply for insurance online than offline to reduce distribution and infrastructure costs so that policyholders can obtain insurance at a lower premium. Many products can be purchased online. In this regard insurance applications are made online allowing potential customers to freely choose and compare many popular insurance products available in different locations.
This allows customers to better understand the different insurance products available and allows potential customers to choose the right product online. Attractive and comprehensive insurance portal:
Most insurance application websites have an eye-catching presence and more comprehensive form filling by uploading the required documents instead of preparing offline. You can perform the submission process. Access to product reviews-by submitting online you can view and listen to various reviews of insurance products you need from people who request the product as a good product reference.