 In this module, we shall look at one particular Takaful model. In our previous module, we mentioned that there could be three models of Takaful business, Wakala-based Takaful model, Mudarba-based Takaful model, or there could be a Wak-based Takaful model. In this module, we shall look at Wakala-based Takaful model. In this model, Takaful operator, the Takaful management company, manages Takaful fund as a Wakil, hence the name Wakala. The Takaful operator, as such, i.e. as the manager of Takaful fund, receives a fixed fee, or a fee as a percentage of the participants' contributions to the Takaful fund. In case of Wakala, if you remember, we say that Wakala is an agency contract which allows an agent to receive a fixed fee for doing something specific for someone who pays the fee. In certain cases, the Wakil can receive an additional bonus as a performance-related fee as well. So, that principle is being used here in Takaful. The Takaful operator manages the Takaful fund on the basis of Wakala and hence receives a Wakala fee which could be fixed, or which could be a percentage of the donations contributed by the participants. It could be 10%, it could be 20%. In fact, in practice, it could be up to 35% or even more percent of the donations. The Takaful operator may also receive performance-based remuneration as well, which is allowed under the rules on Wakala. Let us look at this thing diagrammatically. So, we have this person, our participant, into the Takaful business. This person contributes donations to the Takaful fund. Now we will go into detail a little bit. First, we said that there is a Takaful operator, there is a Takaful fund, and then we said there are participants. Now, when we go further into details, we have here a participant. We have a Takaful fund, we have a Takaful operator and in between there are two other entities in black. So, Takaful fund is actually divided into two sub funds. One is called a risk fund and the other one is called an investment fund. And there are specific reasons for splitting the Takaful fund into risk fund and investment fund. And we would explain these in a few minutes. Now, the Takaful operator in Wakala-based Takaful business manages these two sub funds on the basis of Wakala. So, generically, we say Takaful operator manages these two funds. So, in case of Wakala-based model, we have quite a few entities. We have our players, we have participants, we have the Takaful fund and we have the Takaful operator, and in between we have some sub funds. Now, when donations are contributed by the participants, they first go into the Takaful fund. Then the Takaful operator decides what percentage of this would go into risk fund and what percentage of this would go into the investment fund. And on the basis of Wakala, the Takaful operator manages these two funds with an objective to generate returns. So, returns coming out of risk fund and returns coming out of the investment fund. So, these returns, they actually go back to the risk fund and investment fund respectively. In this whole process, of course, the Takaful operator would be receiving its Wakala fee. The risk fund, as I said previously, is used to pay benefits to the participants whenever a claim occurs. Now, the risk fund and investment fund, as I said, they are invested. Risk fund would give benefits to the participants as per their claims, as per their valid claims. And if there is any excess left in the risk fund, that would actually go into the investment fund. It would be going into the investment fund. And some of the excess can go to the operator as a performance-based bonus. So, the Takaful operator would be receiving a fixed Wakala fee. And in addition, if the Takaful business is doing well, the Takaful operator may receive some additional benefit in the form of a performance-based bonus. So, this is a kind of sketch of a Wakala-based Takaful model. In this case, the participants, they are protected against any adversaries. Of course, for that to happen, they contribute donations to Takaful fund. Now, we are using donation in Takaful because it takes care of the prohibition of riba, gharar, and gambling or mason. How? Donations are something which are given away to the Takaful fund. Without any expectation or without any contractual requirement for the Takaful fund to give back certain things to the participants. So, this is a voluntary kind of arrangement where it is understood there is an expectation, but this is not compulsion. The Takaful fund would be giving these benefits to this participant or someone else. This benefit coming to this participant may not actually be coming from their own donations. This could be coming from other people's donations. And this is a point I would be going into some details in one of the next modules. There is no gharar in this case because there is no sale or any exchange of the sort happening which is the case in case of insurance. And of course, because there is no contractual obligation on the Takaful fund to give these benefits to the participant, there is no maester or gambling as well. The Takaful operator does whatever it is required to do as a wakeel of the Takaful fund. So, unlike an insurance company, the Takaful operator doesn't have that kind of a role. Insurance company does everything. In case of insurance company, conventional insurance company, you actually pay a premium and you receive this document which is known as a policy. So, you are actually buying that policy and any benefits contained in that policy. Here, the story is very different. You are just donating your money and later on there is a possibility that you would be benefiting from this.