Suppose Ali enters into a one-year Motor Takaful contract with Aljazeera operator, who manages Motor...
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Suppose Ali enters into a one-year Motor Takaful contract with Aljazeera operator, who manages Motor Takaful Fund (MTF) on mudarabah basis of Islamic contract. The agreed yearly Contribution by each member in Motor Takaful fund with Aljazeera operator is 2000 AED. Out of 2000 AED, 60% goes to the Participants Risk Fund (PRF), while rest of the contribution goes to Participants investment fund (PIF). Suppose that there are 1000 participants in the Motor Takaful Fund and all started their contributions at the same time with the same terms of the contract. Once entered into the contract, a participant cannot terminate the contract for six months; else, he will loose all his contributions to PRF, while still maintaining the claims on PIF. Suppose that profit share of Aljazeera operator is 50%. Further suppose that there is 8% average return on the accumulated funds in PIF at the end of the year, where the contributions in the PIF are fully invested and the surplus will be distributed at the end of the year. In addition, the MTF is renewed every year. Using all the above information:
What will be the total profit on the PIF at the end of the year?
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