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What Exactly is Hibah Takaful in Malaysia?

Key points

  1. Definition/Concept of Takaful and Hibah.
  2. The difference between Hibah and Will.
  3. Requirements and conditions in the contract with Hibah.
  4. Types of Hibah.
  5. The Advantages and Importance of Hibah Takaful.

Nowadays, we hear a lot of breadwinners have died and left their wives and families without anything on hand. And we also heard in general, once our husband died, all of his wealth, EPF, stock, account bank, businesses, and among others, will be frozen under the Probate and Administration Act 1959 (Revised 1972) as the purpose is to help independent legal processes run, such as to settle all debts receivable of the deceased, if any, and the process of division of estate.

That is why the word HIBAH TAKAFUL is quite common in Malaysia and many of us that did not know have started to dig more and get it, in case if anything happens to them in the future, there is something they leave behind for their family.

Definition / Concept of Takaful and Hibah

Takaful can be defined when a member contributes money into a pool system to guarantee each other against loss or damage and it is based on Shariah Compliance, or Islamic religious law. Usually, we hear this word “takaful” when we want to take up insurance because it is a shariah-compliant policy and slightly different from the conventional one.

Not just that, when we talk about takaful, it is not just a Shariah Compliance but it is also free from these three elements, such as riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles, which are against Islamic restrictions.

Hibah, on the other hand, is the granting of ownership of property from one party to another without any consideration (iwad) that occurs during the life of a hibah provider, made voluntarily, not meant to glorify anybody and given by reciting an ijab and qabul or any such expressions.

In simple terms, hibah can be considered as a “gift” that can be movable or immovable property that occurs during the life of the settlor. Let’s say if someone takes hibah while he or she is alive, if something happens in the future, the family of he or she will receive 100% of the hibah without any deduction. Hibah can also be given to anyone the giver desires, whether heirs or not, regardless of race and religion. With the hibah, the family can use the money to continue living while waiting for the property division process.

The difference between Hibah and Will

Hibah, as we know, is a gift that allows the settlors to distribute more of their wealth to anyone, including family members and non-family members, regardless of religion. Furthermore, while Hibah appears to be more Islamic, it can be nominated to a non-muslim as long as the person is able to inherit the asset by bequest as an adult (mukallaf) or a minor. It is entirely up to you, not like will, in terms of the asset or amount that you wish to hibah.

Hibah’s total opposite is Will. The will can only be given to non-heirs, and the assets left to recipients cannot exceed one-third of the total amount of property left. Unlike hibah, the asset bequeathed is limitless.

We have provided a table below to make it easier for you to understand:

DifferencesHibahWill
Asset transfer/inheritanceWhen the settlor is still aliveAfter the death of a settlor
Limit of assets/ inheritanceThere is no limit, totally up to youCannot exceed 1/3 of the total inheritance amount
RecipientAnyone the settlor would like to pointedOnly to Non-Heirs
Heirs’ permissionNo need for consent from the heirsConsent from heirs is a must if the amount nominated to a beneficiary exceeds ⅓ limit
Transfer OwnershipCan be transfer during or after the settlor alive or deathCan only be transfer after the settlor death

Requirements and conditions in the contract with Hibah

In order to fulfill the hibah contract, these four requirement or conditions need to be met:

  • A Hibah settlor (Al-Wahib)
  • A hibah settlor (the person assigned) must be an adult of sound mind, have reached maturity (adult), and be a sensible person (rusyd) capable of managing the property. Not only that, but the settlor must be the legal owner of the assets to be granted as hibah.

  • Hibah beneficiaries (Al-Mawhub Lahu)
  • A Hibah beneficiary is the person appointed by the suzerain to have the hibah. The beneficiary can be either Muslim or non-Muslim, with the ability to own adult (mukallaf) or minor property (non-mukallaf). If the beneficiary is non-mukallaf or disabled, a representative known as a “Wali Mal,” or trustee, may be appointed to accept the asset on his or her behalf, and possession of the property must be given to the beneficiary.

  • Hibah assets must meet certain conditions
  • The assets granted as hibah must be halal and valuable, according to Shariah Law. Furthermore, when the assets are transferred to the beneficiary, the settlor must retain active ownership of them.

  • Offer and acceptance / Ijab and Kabul (Sighah)
  • To ensure that the offer and acceptance of the hibah is valid, there are utterances or acts that need to be done either through verbal agreements, non -verbal agreements, or certain acts of conduct.

Types of Hibah

In Hibah, there are two types of categories which is:

  1. Absolute hibah
  2. Absolute hibah, also known as Absolute Assignment, is given as a gift (free) when the settlor is still alive. In this absolute hibah, there are a few disadvantages, such as higher cost, the settlor losing his or her ownership of assets with immediate effect, and the asset will be an inheritance in the case where the beneficiary/recipient passes away.

  3. Conditional hibah
  4. Conditional hibah can be defined as a certain condition associated with the Hibah contact (akad) for the transfer of assets to take place.

There are two main conditions for this:

  • Umra
  • An umra is a gift that is temporary when the ownership assets are fixed or limited and based on the death of either the settlor or the recipient.

  • Ruqba
  • Ruqba is the ownership transfer from one to another, whereby if the settlor or beneficiary of either one passes away, the property must be owned by the one who is still alive.

The Advantages and Importance of Hibah Takaful

There are numerous advantages to applying for Hibah Takaful. That is one of them.

  1. It can become as your income replacement
  2. Losing someone in our family can be difficult, especially when the breadwinner dies unexpectedly, and it can be a more painful loss with a large impact. Because of these losses, expenses for the wife, children, and parents may cease. As a result, the hibah takaful comes into play to assist and ensure that your heirs receive the heirs you leave behind and can continue to live comfortably. The amount that the heirs receive is usually determined by the type of hibah takaful plan that the person has chosen.

  3. It can settle your debt
  4. Although hibah can replace your income, it can also assist heirs in settling all debts on behalf of their loved one. In Islam, we must settle all debts in life, including those incurred after death. According to the Prophet SAW, “all the sins of the martyrs are forgiven except debt” (hadith narrated by Muslim). As we are constantly reminded, when someone dies, the first thing that we, as heirs, must settle is debt. When there is hibah takaful, it is much easier for your heirs to use the money you have left to pay off all of your debts, which can alleviate some of their burden.

  5. Absolute recipient & hassle-free process
  6. To distinguish between will and hibah takaful, hibah takaful is the unquestionable gift of a person to their heirs, either in cash or in non-property form. The nomination for the takaful is done voluntarily by the participant while the participant is still alive and sane.

    In terms of procedure, hibah takaful is the simplest and does not incur any additional costs. Furthermore, if you lose someone, you will not want to go through the time-consuming process of hibah takaful, which does not require the heirs to hire a lawyer or appoint a third party to manage it.

    With hibah takaful, the value is given to the recipient in its entirety, with no deductions.

    Additional note: Furthermore, because hibah takaful is classified as a liquid asset, the claim process is simplified and faster, with claims being processed within a month.

  7. For Child education fund
  8. Did you know that Hibah takaful can be used to fund a child’s education? As we all know, the rising cost of education every year makes it difficult for some parents to contribute enough money for their children’s education. Every Malaysian university has a different rate of yearly or monthly fees, especially if your children attend a private university, which can cost tens of thousands of ringgit.

    If you decide to start a takaful hibah now, even if you start with the lowest monthly contribution, believe me, if anything happens to you in the future, you already have a backup or can provide sufficient funds for your child’s education. your child. Your children will have a brighter future as a result of what you have done for them and they will also be grateful to have parents like you.

  9. There is no need to appoint a lawyer
  10. Unlike wills, hibah takaful does not require you to appoint a lawyer, making the process very simple. Your heirs can make a claim by going to the nearest takaful branch and bringing the necessary documents. However, keep in mind that only the person who has been nominated is eligible to file the claim.

Verdict

Hibah takaful is very important nowadays because we can’t predict what our future will be like. It’s okay if you started with the smallest contribution or plan, as long as you know you made the right decision to start now rather than later.

I understand that not everyone can afford one, but if you are financially capable, you should consider hibah takaful. At the very least, you know that if you were to vanish one day, your family would be safe and able to carry on with their lives as usual with a lighter burden on their shoulders.

By the words of Allah means: “Every living being will taste death and that only on the Day of Resurrection will your reward be completed. Then whoever is removed from hell and admitted to paradise then indeed he has succeeded. And (remember that) life in this world is nothing but pleasure for the deceived. ” (Surah Ali Imran, 185).

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