Established and gharar. After receiving the premiums from the

Established since 1908, Great Eastern Life Assurance (Malaysia) Berhad (Great
Eastern Malaysia) was certified by The Malaysia Book of Records as “The Oldest
and Largest Life Insurer in Malaysia” in 1998. As explained in question 1
regarding gharar, the Great Eastern Malaysia is offering various types of
conventional insurance products. For instance, under ‘Family category’ they offer Life Protection
policy such as Great Early VantageCare 2, Great MaxiProtector, Smart Legacy,
SmartProtect Essential, Great Term Direct, Great VantageCare 2 and Smartprotect
Max (refer to Appendix 2 for brochure).
In order to widen their market, the Great Eastern Malaysia also offers the Shariah
compliant products under Great Eastern Takaful.

In addition, conventional insurance contract/
policy also has other prohibited elements such as riba’ and gharar. After
receiving the premiums from the policy holders (insured), the insurance
companies (insurer) will invest the money collected from the fund. Normally,
the insurer will invest in financial instruments that offers high rate of
returns and there are possibilities to invest in the interest-based
investments. Thus, the riba’ element occurs in conventional insurance. On the
other point, it can be perceived that the overall insurance contract is relates
with chances. The chance is said to be occur in conventional insurance contract
simply because the insured only will gain (receive indemnity) when the risk
(disaster) occurs. Normally, the insured will receive the indemnity payment
that is higher than what he / she has paid (premium) to the fund. In contrast
situation (in the event of no disaster occurs), then, the insurer will gain
because they do not have to pay any compensation to the insured and at the same
time, the insured will experience the loses. Thus, this circumstances (one
party gain due to the other party lose), is a practising of maisir which one of
the prohibited elements in Shariah.

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