Personal Finance Term
Hibah (Takaful Nomination)
A conditional gift mechanism in family takaful that lets you assign your takaful benefit directly to a named beneficiary, so the payout passes to them outside the normal Islamic inheritance (faraid) distribution.
Under faraid, a deceased Muslim's estate is distributed among heirs in fixed proportions, and assets usually cannot simply be left to one chosen person. Hibah solves this for takaful: by nominating a beneficiary under a hibah arrangement, the takaful benefit is treated as a gift that transfers directly to that person on death, bypassing the estate and the faraid split. This is why hibah is widely used to provide for a spouse, a specific child, or a dependant with special needs.
For non-Muslims, conventional life insurance offers a similar outcome through a beneficiary nomination under the Financial Services Act, but the legal basis differs. When taking family takaful, confirm whether your nomination is a hibah (absolute gift) or a wasi (executor) nomination, because the two have very different effects on who ultimately receives the money. For larger estates, hibah is often combined with a will and other estate-planning tools.