The only type of insurance universally recognized as halal in Islam is Takaful, which translates to mutual guarantee or joint responsibility. Unlike conventional insurance, which functions as a profit-driven commercial contract transferring risk to a corporate entity, Takaful operates as a cooperative community pool where members make voluntary donations to assist fellow participants suffering losses. Surpluses are shared among members, and all financial investments are strictly monitored by Sharia boards to ensure zero involvement with interest or prohibited industries.