MCQ For Chapter 7: Takaful (Islamic Insurance)

MCQ for Chapter 7: Takaful (Islamic insurance)
1. The following statements describe the role(s) of the takaful operator in the wakalah model:
i) Control of expenses
ii) Paying of claims
iii) Cost distribution
iv) Sharing of profits
v) Investing in the takaful
Is it:
a) i and ii only
b) iii and iv only
c) i, ii and iii
d) i, iii and iv
e) i, ii, iv and v
Correct answer: c) The agent in the wakalah model does not share in the profits or make investment
in the takaful.
Incorrect answers:
a) The answer is c. The agent in the wakalah model does not share in the profits or make investment
in the takaful.
b) The answer is c. The agent in the wakalah model does not share in the profits or make investment
in the takaful.
d) The answer is c. The agent in the wakalah model does not share in the profits or make investment
in the takaful.
e) The answer is c. The agent in the wakalah model does not share in the profits or make investment
in the takaful.
2. Health and life insurance were first introduced by the _______ and ________.
a) British and Americans
b) Greeks and Germans
c) Russians and Greeks
d) Romans and Greeks
e) Chinese and Arabs
Correct answer: d) The Greeks and Romans first introduced health and life insurance.
Incorrect answers:
a) The answer is d. The Greeks and Romans first introduced health and life insurance.
b) The answer is d. The Greeks and Romans first introduced health and life insurance.
c) The answer is d. The Greeks and Romans first introduced health and life insurance.
e) The answer is d. The Greeks and Romans first introduced health and life insurance.
3. _________ and _______ were the key motivations for the development of takaful by the
Muslims.
a) Tabarru’ and ta’awun
b) Mudarabah and ta’awun
c) Tabarru’ and mudrabah
d) Musharakah and salam
e) Istisna and mudarabah
Written by Zayyad Adbul-Baki

To be used with Haniffa/Hudaib: Islamic Banking and Finance. An Introduction 978-1-4737-3460-9, © 2019 Cengage EMEA
Correct answer: a) Tabarru’ and ta’awun were the key motivations for the development of takaful.
Incorrect answers:
b) The answer is a. Tabarru’ and ta’awun were the key motivations for the development of takaful.
c) The answer is a. Tabarru’ and ta’awun were the key motivations for the development of takaful.
d) The answer is a. Tabarru’ and ta’awun were the key motivations for the development of takaful.
e) The answer is a. Tabarru’ and ta’awun were the key motivations for the development of takaful.
4. The conventional insurance is prohibited in Islam because it can give rise to issues such as
________ and ________.
a) gharar and ta’awun
b) mudarabah and profit
c) maysir and gharar
d) maysir and profit
e) interest and profit
Correct answer: c) Maysir and gharar are prohibited in Islam.

Incorrect answers:
a) The answer is c. Maysir and gharar are prohibited in Islam, ta’awun is not.
b) The answer is c. Mudarabah and profit are permissible in Islam. Maysir and gharar are prohibited
in Islam.
d) The answer is c. Profit is permissible in Islam. Maysir and gharar are prohibited in Islam.
e) The answer is c. Interest is prohibited but profit is permissible in Islam. Maysir and gharar are
prohibited in Islam.
5. In the mudarabah takaful model, the provider of capital is known as the ___________.
a) rabb-ul-mal
b) mudarib
c) musharakah
d) murabaha
e) wakil
Correct answer: a) The provider of capital is known as rabb-ul-mal.

Incorrect answers:
b) The answer is a. The provider of capital is known as rabb-ul-mal.
c) The answer is a. The provider of capital is known as rabb-ul-mal.
d) The answer is a. The provider of capital is known as rabb-ul-mal.
e) The answer is a. The provider of capital is known as rabb-ul-mal.
6. The wakalah-mudarabah takaful model involves the principles of ________ and ________.
a) mudarabah and wakalah
b) ta’awun and tabarru’
c) profit and wakalah fee
d) interest and profit
e) qard al hassan and tabarru’
Correct answer e) The wakalah-mudarabah takaful model involves the principles of qard al hassan
and tabarru’.
Incorrect answers:
a) The answer is e. The wakalah-mudarabah takaful model involves the principles of qard al hassan
and tabarru’.

b) The answer is e. The wakalah-mudarabah takaful model involves the principles of qard al hassan
and tabarru’.
c) The answer is e. The wakalah-mudarabah takaful model involves the principles of qard al hassan
and tabarru’.
d) The answer is e. The wakalah-mudarabah takaful model involves the principles of qard al hassan
and tabarru’.
7. The main distinguishing feature of the super-hybrid takaful model from the hybrid takaful
model is its _________ component.
a) wakalah
b) mudarabah
c) waqf
d) wakalah-mudarabah
e) wakalah-musharakah
Correct answer: c) The super-hybrid has a waqf component while the hybrid model does not have it.
Incorrect answers:
a) The answer is c. The super-hybrid has a waqf component while the hybrid model does not have it.
b) The answer is c. The super-hybrid has a waqf component while the hybrid model does not have it.
d) The answer is c. The super-hybrid has a waqf component while the hybrid model does not have it.
e) The answer is c. The super-hybrid has a waqf component while the hybrid model does not have it.
8. The AAOIFI standard that regulates the disclosure of the bases for determining and allocating
surplus or deficit in takaful companies is ____________.
a) Financial Accounting Standard 23
b) Financial Accounting Standard 12
c) Financial Accounting Standard 16
d) Financial Accounting Standard 9
e) Financial Accounting Standard 13
Correct answer: e) FAS 13 regulates the disclosure of the bases for determining and allocating
surplus or deficit in takaful companies.
Incorrect answers:
a) The answer is e. FAS 13 regulates the disclosure of the bases for determining and allocating
b) The answer is e. FAS 13 regulates the disclosure of the bases for determining and allocating
c) The answer is e. FAS 13 regulates the disclosure of the bases for determining and allocating
d) The answer is e. FAS 13 regulates the disclosure of the bases for determining and allocating
9. Deficits in the Participants’ Risk Fund (PRF) or the Participants’ Investment Fund (PIF) which are
due to the takaful operator’s mismanagement are made good from the ___________.
a) qard al hassan
b) mismanagement funds
c) shareholders’ fund
d) takaful fund
e) wakalah fund

Correct answer: c) The deficit is made good by transferring from the shareholders’ fund (reserves
and capital).
Incorrect answers:
a) The answer is c. The deficit is made good by transferring from the shareholders’ fund (reserves
and capital).
b) The answer is c. The deficit is made good by transferring from the shareholders’ fund (reserves
and capital).
d) The answer is c. The deficit is made good by transferring from the shareholders’ fund (reserves
and capital).
e) The answer is c. The deficit is made good by transferring from the shareholders’ fund (reserves
and capital).
10. ____________ is a takaful undertaking for takaful operators.

a) Retakaful
b) Wakalah takaful
c) Mudarabah takaful
d) Post-takaful
e) Risk insurance
Correct answer: a) Retakaful is a takaful undertaking for takaful operators.

Incorrect answers:
b) The answer is a. Retakaful is a takaful undertaking for takaful operators.
c) The answer is a. Retakaful is a takaful undertaking for takaful operators.
d) The answer is a. Retakaful is a takaful undertaking for takaful operators.
e) The answer is a. Retakaful is a takaful undertaking for takaful operators.


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MCQ For Chapter 7: Takaful (Islamic Insurance)

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MCQ for Chapter 7: Takaful (Islamic insurance)

Written by Zayyad Adbul-Baki

Correct answer: c) Maysir and gharar are prohibited in Islam.

Correct answer: a) The provider of capital is known as rabb-ul-mal.

Written by Zayyad Adbul-Baki

Written by Zayyad Adbul-Baki

10. ____________ is a takaful undertaking for takaful operators.

Correct answer: a) Retakaful is a takaful undertaking for takaful operators.

Written by Zayyad Adbul-Baki

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