What Exactly is Hibah Takaful in Malaysia?
- Definition of Takaful and Hibah.
- Differences between Hibah and will.
- Requirements and conditions in the contract with Hibah.
- Types of Hibah.
- The advantages and importance of Hibah Takaful.
Many breadwinners have died and left their wives and families without anything on hand. And in general, once the husband dies, all of his wealth, EPF, stock, account bank, businesses, and others will be frozen under the Probate and Administration Act 1959 (Revised 1972). The purpose is to help independent legal processes run, like settling all debts receivable of the deceased, if any, and the process of division of an 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 anything happens to them in the future, there is something they leave behind for their family.
Definition of Takaful and Hibah
Takaful can be defined as when a member contributes money to a pool system to guarantee each other against loss or damage. It is based on Shariah compliance or Islamic religious law. Usually, we hear the 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 Shariah Compliance. Still, 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 property ownership from one party to another without any consideration (iwad) that occurs during the life of a Hibah provider. It is 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 a ‘gift’ that can be a movable or immovable property that occurs during the settlor’s life. Let’s say someone purchases Hibah while alive; if something happens in the future, the family 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.
Differences between Hibah and will
Hibah, as we know, is a gift that allows the settlers 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 can inherit the asset by legacy as an adult (mukallaf) or a minor. It is entirely up to you, unlike a will, regarding the asset or amount 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 entire property left. Unlike Hibah, the asset bequeathed is limitless.
We have provided a table below to make it easier for you to understand:
|Asset transfer/ inheritance|
|When the settlor is still alive||After the death of a settlor|
|Limit of assets/ inheritance|
|There is no limit, totally up to you||Cannot exceed 1/3 of the total inheritance amount|
|Anyone the settlor would like to pointed||Only to non-heirs|
|No need for consent from the heirs||Consent from heirs is a must if the amount nominated to a beneficiary exceeds ⅓ limit|
|Can be transfer during or after the settlor alive or death||Can only be transfer after the settlor death|
Requirements and conditions in the contract with Hibah
To fulfil the Hibah contract, these four requirements or conditions need to be met:
- A Hibah settlor (al-Wahib)
- Hibah beneficiaries (al-Mawhub Lahu)
- Hibah assets must meet certain conditions
- Offer and acceptance (ijab and qabul)
A Hibah settlor (the person assigned) must be an adult of sound mind, have reached maturity, 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.
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 their behalf. Possession of the property must be given to the beneficiary.
According to Shariah law, the assets granted as Hibah must be halal and valuable. Furthermore, when the assets are transferred to the beneficiary, the settlor must retain active ownership.
To ensure that the offer and acceptance of the Hibah are valid, utterances or acts need to be done through verbal, non-verbal, or specific actions of conduct.
Types of Hibah
In Hibah, there are two types of categories which are:
- Absolute Hibah
- Conditional Hibah
Absolute Hibah, also known as Absolute Assignment, is given as a gift (free) when the settlor is still alive. But, the disadvantages are higher cost, the settlor losing their ownership of assets with immediate effect, and the asset will be an inheritance if the beneficiary/ recipient passes away.
Conditional Hibah can be defined as a certain condition associated with the Hibah contact (akad) for the transfer of assets.
There are two main conditions for this:
An umra is a temporary gift when the ownership assets are fixed or limited and based on the death of either the settlor or the recipient.
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 still alive.
The advantages and importance of Hibah Takaful
There are numerous advantages to applying for Hibah Takaful.
- It can become your income replacement
- It can settle your debt
- Absolute recipient and hassle-free process
- For child education fund
- There is no need to appoint a lawyer
Losing someone in our family can be difficult, especially when the breadwinner dies unexpectedly. It can be a more painful loss with a significant 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 the heirs receive is usually determined by the type of Hibah Takaful plan the person has chosen.
Although Hibah can replace your income, it can also assist heirs in settling all debts on behalf of their loved ones. In Islam, we must pay 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 your debts, which can alleviate some of their burdens.
To distinguish between will and Hibah Takaful, the latter 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.
Regarding the procedure, Hibah Takaful is the simplest and does not incur additional costs. Furthermore, if you lose someone, you will not want to go through the time-consuming process of Hibah Takaful. This does not require the heirs to hire a lawyer or appoint a third party.
With Hibah Takaful, the value is given to the recipient in its entirety, with no deductions.
Note: Hibah Takaful is classified as a liquid asset, so, the claim process is simplified and faster, with claims being processed within a month.
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 different yearly or monthly fees, especially if your children attend a private university, which can cost tens of thousands of ringgit.
If you decide to purchase Hibah Takaful now, even with the lowest monthly contribution, you can provide sufficient funds for your child’s education if anything happens to you. Your children will have a brighter future due to what you have done for them, and they will also be grateful to have parents like you.
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.
Hibah Takaful is essential nowadays because we can’t predict what our future will be like. It’s okay if you started with the cheapest contribution or plan as long as you know you made the right decision to begin 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 are gone one day, your family will be safe and able to carry on with their lives as usual with a lighter burden on their shoulders.
“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, indeed, he has succeeded. And (remember that) life in this world is nothing but pleasure for the deceived.”
– Surah Ali Imran, 185