ILA Takaful Investment Plan
1. Objective of the plan
The ILA TAKAFUL INVESTMENT PLAN IS a Single contribution investment linked plan for an initial duration of 4 years which has been carefully designed for you to invest your funds in a Shariah Compliant Investment fund with the potential of earning good returns on your investments.
2. Features / Description
This plan can be set up by a single person or institutions such as Waqfs through its “Mutawalli” i.e. the appointed manager of Waqfs.
The minimum age at entry is 18 years provided age at maturity does not exceed 90 years.
A single contribution plus the applicable regulatory fee will be payable at the start of the policy. Charges shall be deducted from the single contribution and the net amount of the contribution will be invested in properties, and ILA (acting as the Takaful Operator) will declare investment return on the investment which will be paid on a yearly basis. The value of the policy at any time will be referred to as Policy Value.
The minimum single contribution under this plan is Rs 100,000 plus the applicable regulatory fee. Other fees and Charges are further described in section 4.
3. Policy Value
The Policy Value will be the Participant Investment Fund (PIF) as further described in the next section.
4. Mechanism of the fund
4.1. Mode of operation
A single contribution plus the applicable regulatory fee will be payable at the start of the policy also referred to as Date of Commencement. An upfront Wakalah charge, expressed as a percentage of the Single Contribution, will then be deducted from the single contribution received to cover for management expenses such as administration, commissions, management and policy fees.
The regulatory fee and Wakalah charge are provided in the specimen policy document and can be obtained upon request.
A one-off Life Tabarru charge will then be determined and deducted from the single contribution made. The tabarru is dependent on age, occupation, health status and gender. This Tabarru charge will flow directly to the Tabarru Fund and will be used to provide mutual financial benefits to all eligible participants in case of the event of death as further described in Sections 4.5 and 4.6 below.
4.2. Participant Investment Fund
After the above-mentioned deductions have been made, the remaining amount of the single contribution, also referred to as net single contribution, will flow to the Participant Investment Fund (PIF). The PIF is a collective investment pool established by the Takaful Operator in accordance with Shariah Principles and applicable regulatory requirements.
Under this specific scheme, ILA, who will act as Mudarib (Manager), shall invest the net single contribution made by the participants in properties owned by ILA. The related rental income from these properties, net of expenses, shall be further distributed to the participants and Mudarib of the PIF annually.
4.3. Properties and fund size
Two properties currently valued at Rs 153.2M and owned by ILA shall constitute this fund. These are currently rented to commercial operators, whose activities are in accordance with Shariah Principles.
Details of the two properties shall be stated in the schedule of the Policy document, a specimen copy of which can be obtained upon request.
Full description including pictures and exact location of the underlying properties and nature of activity of the tenants can also be obtained upon request.
4.4. Participant’s Notional Share
Each participant will be granted a proportionate notional share of the property being the net single contribution flowing to the PIF expressed as a percentage of the value of the property as the date of commencement of the plan. The formula used to compute the Participant’s notional share shall be as follows:
Participant Notional Share =
Net Single Contribution
Value of Properties at Date of Commencement
4.5. Property valuation and distribution of capital gains
The properties shall also be subject to a valuation on a yearly basis. Any related capital gain shall be distributed between the Mudarib and Participant and be reflected on the participant’s fund value and distributed when the contract is dissolved.
Such valuations shall be undertaken by a duly appointed and qualified independent chartered valuer or valuation firm. The valuation will be prepared in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation – Global Standards, 2022, (Red Book) which adopts and applies the International Valuation Standards (IVS) published by the International Valuation Standards Council (IVSC). The current appointed valuer is Elevante Property Services, a regional leader in valuation, advisory and corporate real estate services.
The respective share of distribution of any Capital gains shall be stated in the policy document a specimen copy of which can be obtained upon request.
4.6. Tabarru Fund
Contributions are made by participants specifically to provide coverage on a co-operative basis (Mutual Financial Benefit). This fund will be used to provide cover for death benefits of the participants. The Takaful Operator will, for a one off Tabarru Charge described under 4.1, be operating the Tabarru Fund on behalf of the Participants in terms of all insurance transactions including the signing of policies, payment of claims and other related activities.
4.6.1. Surplus from the Tabarru Fund
All participants will be entitled to receive 90% of any distributable surplus arising from the Tabarru charge as defined in the Schedule. The balance of 10% of the distributable surplus will be retained as performance fee for the management of the Tabarru Fund. The distributable surplus will be calculated by the Takaful Operator and transferred to the Participant’s PIF. The exact amount of distributable Surplus will be determined triennially by the Statutory Actuary and is subject to approval by the Shariah Expert.
4.6.2. Sum Assured
The Sum Assured is the fixed amount payable from the Tabarru Fund on death of the Participant before the maturity date. It is based on the Age at entry is as follows:
| Age at date of Entry | Sum Assured* |
| 18 to 65 | Rs 50,000 |
| 66 to 75 | Rs 25,000 |
| 76 and above | Rs 10,000 |
* The Sum Assured shall limited per Participant irrespective of the number of policies purchased.
The maximum age at entry is 86 years.
4.6.1. Death Benefit
The death benefit is the Sum Assured applicable at date of entry PLUS the Policy Value as at date of death.
5. Shariah Certification by Shariah Expert
ILA TAKAFUL INVESTMENT PLAN is duly certified as Shariah compliant by Dr Ahmed MOHAMMED MOKHTAR, who holds a bachelor, master and phd degrees in the field of Shari’ah and Islamic Banking Finance.
The original certification can be viewed at the Head Office of ILA and a copy thereof can be obtained on request prior to subscribing to the
ILA TAKAFUL INVESTMENT PLAN.
6. Estimate of annual income and maturity benefits
Net Single Contribution
(Net of Fee and Charges)
Rs1,000,000
Mutual Financial Benefit
Sum Assured
| Age at Entry | Death Cover |
|---|---|
| (Tabarru Fund) | |
| 30yrs | Rs 50,000 |
| 66yrs | Rs 25,000 |
| 86yrs | Rs 10,000 |
Estimated Annual Income*
Estimated Net Annual Return
| A | B | C |
|---|---|---|
| 3.20% | 3.50% | 4.20% |
| Rs 32,000 | Rs 35,000 | 42,000 |
| Rs 32,000 | Rs 35,000 | 42,000 |
| Rs 32,000 | Rs 35,000 | 42,000 |
Estimated Policy Value* at Maturity
Estimated Capital Gains
| D | E | F |
|---|---|---|
| -2% | 0% | 2% |
| Rs980,000 | Rs1,000,000 | Rs1,020,000 |
| Rs980,000 | Rs1,000,000 | Rs1,020,000 |
| Rs980,000 | Rs1,000,000 | Rs1,020,000 |
Estimated Total Revenue*
4 years’ Annual Income + Maturity
| G = | H = | I = |
|---|---|---|
| (4 x A) + D | (4 x B) + E | (4 x C) + F |
| Rs1,108,000 | Rs1,140,000 | Rs1,188,000 |
| Rs1,108,000 | Rs1,140,000 | Rs1,188,000 |
| Rs1,108,000 | Rs1,140,000 | Rs1,188,000 |
*Please refer to notes contained in Disclaimer
7. Performance
| Past 4 years Performance* |
| Rental Return** |
| Fair Value Gain/(Loss)*** |
FY Ending
| 31-Dec-22 | 31-Dec-21 | 31-Dec-20 | 31-Dec-19 |
| 3.6% | 3.6% | 5.4% | 6.3% |
| 0.9% | 0.8% | 1.3% | 1.0% |
8. Disclaimer
This document is for information purposes only and does not constitute an offer to buy or sell or to conduct any investment activity.
In making investment decisions, participants should not rely solely on this publication and should seek independent professional advice.
The Estimated Net Annual Returns and Estimated Policy Values do not represent the minimum or maximum values. The annual return payable will depend on the actual rental return earned during the year. The Policy Value may go up as well as down as it is subject to variation depending on the value of the property at time of maturity pay-out. At maturity, participants will receive a share of any unrealised capital gains and any capital losses on the property valuation shall be fully attributable to the Participant’s Investment Fund.
Participants may get back less than the net single contribution made in case of capital loss at time of pay-out.
*Past performance figures are not indicative of future performance. Refer to Disclaimer section
**Represents participant’s share of rental return
***Represents participant’s share of unrealised Fair Value gain