The Objectives of Sharīʿah in Nomination for the Payment of Family Takaful Benefits

• DOI: https://doi.org/10.1108/978-1-78973-545-120191009
• Pages: 33-51
• Published date: 26 August 2019
• Date: 26 August 2019
• Author: Safinar Salleh,Akmal Hidayah Halim,Uzaimah Ibrahim,Mohamad Asmadi Abdullah

Chapter 3

The Objectives of Sharīʿah in Nomination

for the Payment of Family Takaful Benets

Sanar Salleh, Akmal Hidayah Halim, Uzaimah Ibrahim and

Mohamad Asmadi Abdullah

Abstract

A family takaful certicate is subscribed by a takaful participant for the

purpose of preparing nancial support for his dependants after his death.

The takaful benets could then be made payable to a nominee named as

the beneciary under conditional hibah (gift). In this respect, the partici-

pant is free to decide to whom the benets are to be given since the law is

silent as to the criteria of the beneciary. This situation gives rise to the is-

sue on whether such a practice fulls the objectives of Sharīʿah, especially

when the nominated beneciary is not the sole dependant of the deceased

participant. Therefore, this research aims to evaluate the status of family

takaful benets, analyse the rules of conditional hibah from the Sharīʿah

perspective and propose solutions whenever necessary. The research adopts

doctrinal analysis by examining existing primary and secondary materials

including statutory provisions and other legal and non-legal literatures.

The study predicates that the application of conditional hibah to the whole

benets does not reect the objectives of Sharīʿah if determination on the

status of the benets is solely based on the nomination made by the par-

ticipant. It is observed that takaful benets payable from the Participant’s

Account should be considered as the deceased’s estate and must be dis-

tributed according to fara’id or Islamic law of inheritance. Conversely, the

sum covered payable from the Participant’s Special Account may be paid

to the deceased’s dependants whose criteria are determined by the Sharīʿah

Advisory Council as the highest authority in Islamic nancial matters.

Keywords: Family takaful benets; conditional hibah; nomination; fara’id;

dependants; objectives of Sharīʿah

Emerging Issues in Islamic Finance Law and Practice in Malaysia, 33–51

Copyright © 2019 by Emerald Publishing Limited

All rights of reproduction in any form reserved

doi:10.1108/978-1-78973-545-120191009

34 Sanar Salleh et al.

Introduction

Family takaful is one of the Islamic nancial instruments that could full the

maqasid al-Sharīʿah (objectives of Sharīʿah). A family takaful certicate sub-

scribed by a takaful participant will provide takaful benets that could serve as

the means of maintenance of his dependants after his death, especially if he is

the breadwinner of the family. In 2003, the Sharīʿah Advisory Council (SAC) of

the Bank Negara Malaysia (BNM) resolved that the benets could be made as

a conditional hibah (gift) to a nominee named as the beneciary in the takaful

certicate (Sharīʿah Advisory Council of Bank Negara Malaysia, 2010). This

resolution was later codied in the Islamic Financial Services Act (IFSA) 2013.

The Act does not specify the individual to be nominated as the beneciary, thus

the participant has full liberty to decide to whom the benets are to be given. In

spite of the approval by the SAC, the position of such nomination has stirred

debates since the position of the benets is merely based on the nomination made

by the participant. Paragraph 6(2) of Schedule 10 of the Act stipulates that if

the nominee is named as an executor, the benet would be part of the estate of

the deceased participant to be distributed in accordance with his will or the law

applicable to the administration, distribution and disposition of his estate upon

his intestacy. However, if the participant opted to name the nominee as a ben-

eciary under conditional hibah, the benet would not then be considered as his

estate but would absolutely belong to the nominee despite the existence of other

dependants who might also be in need of the money.

The application of conditional hibah to the rule of nomination for the pay-

ment of takaful benets draws certain legal issues that are still debatable from the

Sharīʿah point of view. Among the issues that have been discussed in the exist-

ing literature (Abdullah & Abdul Aziz, 2010; Ahmad & Borhan, 2017; Bakar,

Zahid, & Markom, 2014; Ismail, 2009; Mohd Noor & Abdullah, 2009; Salman,

2014) are (1) the status of nomination under conditional hibah, (2) the status of

hibah which is conditional upon death whether it is to be construed as a hibah or

wasiyyah (bequest) and its legal effect, (3) the status of takaful benets whether

they are part of the estate of the deceased participant which should be distrib-

uted according to fara’id (the law of inheritance) and (4) the parties that are

entitled to receive the takaful benets as the beneciary. Nevertheless, no study

has discussed the application of conditional hibah to the rules of nomination

from the perspective of maqasid al-sharīʿah. Therefore, this study aims to analyse

the achievement of the objectives of Sharīʿah through the application of condi-

tional hibah in nomination for the payment of takaful benets under IFSA 2013.

This analysis is important to ensure that the application of conditional hibah in

nomination of beneciary under a family takaful certicate does not merely full

the legal requirements in a mechanical and procedural sense, but its application

should also achieve the objectives of Sharīʿah.

This chapter is divided into six sections. The introduction is followed by a

discussion on the objectives of Sharīʿah in family takaful. The next section out-

lines the rules of nomination provided under IFSA 2013. The status of takaful

benets in Islamic law is discussed in section four followed by an analysis of the