Case Studies of the Practice of Nomination and Hibah by Malaysian TakÓful Operators

Abstract

Nomination is a process whereby a policyholder who purchases the insurance policy should name someone to benefit from the policy in the event of the policyholder’s death. Nomination is purposely performed to ensure the beneficiaries receive the takÉful benefits promptly. The current practice of the nomination clause in family takÉful operation is basically vague because the Takaful Act 1984 does not expressly provide any rule to that effect. This study aims to examine the status of nominees for Muslim participants and non-Muslim participants in family takÉful as stipulated in the takÉful nomination form. It is significant to clarify the status of the nominee, either as a beneficiary or an executor, in order to avoid any misconception among the legal heirs in the future. Besides this, the study also seeks to assess how far the related concept of hibah to the nomination in family takÉful is currently implemented by the takÉful operators in Malaysia. Hibah seems to be an alternative for Muslim participants to allocate the takÉful benefits to the right beneficiaries without adhering to the Islamic law of inheritance (farÉ’iÌ). This study adopts the document analysis to identify whether the takÉful nomination form is standardised and clarified in respect of the status of the nominee for each takÉful operator in Malaysia. Samples of eight licensed takÉful operators are selected in this study. The results of this study found that the takÉful nomination form is not standardised among all the takÉful operators. The status of the nominee is not clarified in some takÉful nomination forms either as a beneficiary or an executor. In addition, the application of hibah seems to violate the nature of hibah itself as hibah should take place during the lifetime of the participant. This study concludes and proposes some recommendations for takÉful operators to provide better and enhanced implementation of nomination and hibah in family takÉful.