| Summary: | Though the takaful industry is undergoing a period of rapid development and growth, it has been seen to be too commercialised and the mutually spirit was seen disappeared. On the other hand, it faces many critics for imposing terms and conditions that benefitted takaful operators and not sufficient to cover the needs of the participants. Therefore the study aims to analyse an alternative model to takaful industry in Malaysia using cooperative takaful model by analysing the mutuality and cooperative concept and discussing few controversial issues related to existing takaful model. The study applied qualitative research method in achieving all objectives through documents analysis, focus group discussions and interviewed. The finding proposed the cooperative takaful model as an alternative to current model. The advantages of cooperative takaful model is able to uphold cooperative and mutuality concept and able to reduce overdependence on the tijari based takaful. Besides, it offers several benefits to participants compare to the existing takaful models. By participating in cooperative takaful, the participant also became the owner of takaful company where some of monthly takaful contribution will be utilise for acquiring company’s share. However, there are some of limitations of this model such as high paid up capital to set up the business, the existing legal system not suit for cooperative takaful model, create dormant member issue, the issue of conflict of interest between management and participant as well as existing takaful operator worried to establish new model due to small market penetration
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