Abstract
This article looks at the development and characteristics of Islamic insurance (takaful) which is compatible with the principles of Islamic finance, thereby making it acceptable and attractive for millions of Muslims as an alternative to conventional insurance. In so doing, this article provides a detailed review on the evolution of takaful in the context of the Malaysian insurance sector which is among the largest players in the global takaful market. Taking cues from the success of takaful in Malaysia, this article explores certain key tenets of takaful and micro-takaful (low-cost takaful) that can be translated specifically into the indian context when the market eventually opens up and possibly into other developing and developed markets with substantial Muslim populations.