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The application of hibah al-ʿumra in disbursement of family Takāful benefits: an exploratory study

Md. Habibur Rahman (Faculty of Business and Management, Universiti Sultan Zainal Abidin (UniSZA), Kuala Terengganu, Malaysia)
Md. Faruk Abdullah (Faculty of Business and Management, Universiti Sultan Zainal Abidin (UniSZA), Kuala Terengganu, Malaysia)
Muhammad Nazmul Hoque (Accounting Research Institute, Universiti Teknologi MARA (UiTM), Shah Alam, Malaysia)
Abu Umar Faruq Ahmad (Institute of Business and Economic Research, United International University, Dhaka, Bangladesh)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 27 July 2022

Issue publication date: 25 January 2023

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Abstract

Purpose

This study aims to investigate and propose the potential practice of hibah al-ʿumra as a Shari‘ah-compliant policy that would encompass the disbursement of death benefits and facilitate their smooth distribution among the projected beneficiaries of the family Takāful.

Design/methodology/approach

This study uses a qualitative approach. It conducts semi-structured interviews with different Takāful practitioners in Malaysia. This study also consulted a few Shari‘ah scholars regarding their opinions on the application of hibah al-ʿumra in disbursing family Takāful benefits. The thematic analysis is carried out to analyse qualitative data.

Findings

From both Shari‘ah and the relevant industry perspectives, the notion of hibah al-ʿumra has a great potential to disburse the family Takāful benefits to the Takāful participants or nominated beneficiaries. Given the conditional nature of hibah in Takāful, it is argued that there is a scope for imposing some conditions to make hibah al-ʿumra a life grant gift. This is expected to play a significant role in resolving the issues relating to the disbursement of family Takāful benefits among the beneficiaries, where it becomes irrevocable.

Practical implications

In the current practice of family Takāful, in the event of the recipient’s death or divorce, the application of absolute hibah results in the disbursement of Takāful benefits among undesirable beneficiaries. In contrast, in hibah al-ʿumra, it is expected that subject to a condition of withdrawal, its practice would help manage any unwanted situation if other potential beneficiaries are nominated upon signing the agreement at the outset.

Originality/value

This study is expected to contribute to help channel the family Takāful benefits into the desired beneficiaries being the proposed hibah al-ʿumra as a form of conditional hibah. Besides, this type of hiba can be treated as a solution in any adverse situation.

Keywords

Acknowledgements

This research has been conducted with the research grant, namely, Dana Penyelidikan Universiti-DPU (UniSZA/2018/DPU/04), provided by the Center for Research Excellence and Incubation Management (CREIM) of Universiti Sultan Zainal Abidin (UniSZA), Malaysia. The authors are grateful to the CREIM, UniSZA. The authors would like to thank the editor and the anonymous reviewers for their valuable comments. The comments have been instrumental in improving the quality of the paper.

Citation

Rahman, M.H., Abdullah, M.F., Hoque, M.N. and Ahmad, A.U.F. (2023), "The application of hibah al-ʿumra in disbursement of family Takāful benefits: an exploratory study", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 16 No. 1, pp. 192-209. https://doi.org/10.1108/IMEFM-08-2021-0341

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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