New Implementation on

Assignment Practice:
November 2017
1 NOMINATION VS ASSIGNMENT

2 SHARIAH ISSUES IN ASSIGNMENT

3 NEW ASSIGNMENT IN GETB

4 THE DIFFERENCES : OLD & NEW ASSIGNMENTS

1 NOMINATION VS ASSIGNMENT

2 SHARIAH ISSUES IN ASSIGNMENT

3 NEW ASSIGNMENT IN GETB

4 THE DIFFERENCES : OLD & NEW ASSIGNMENTS

HOW TO DISTRIBUTE Takaful BENEFITS?

Takaful Benefits
1. We participate in Takaful to mitigate financial risk.
2. Thus, Takaful benefits are very valuable.
3. There are 3 ways to distribute Takaful benefits:
i. Without nomination
ii. With nomination
iii. With assignment

4. Person covered is encouraged to nominate at least one person.

5. This is to evade the possibilities of the Takaful benefits:
i. have too much procedures to make claim
ii. cannot be claimed 100% by the proper claimant
Bear in iii. being regarded as unclaimed money after certain years.
Mind…
NOMINATION: WHAT?

Takaful
P’s heirs
Certificate

Without
Nomination
P
Person Takaful
Covered Benefits

P’s heirs N1 N2 N3 N4
Takaful
Nominees
Certificate

With
Nomination
P
Person Takaful
Covered Benefits
ASSIGNMENT: WHAT?

Person covered (assignor) fully transfer his/her right on Takaful

benefits to another person (assignee), on voluntary basis

With
Assignment
DIFFERENCES BETWEEN NOMINATION & ASSIGNMENT

NO POINT NOMINATION ASSIGNMENT

1 Priority on Balance after paid to Assignment has priority
Distribution of assignee (if any) will be over nomination
Takaful Benefit paid to Nominee

2 Revocation Participant can revoke the Assignor can only revoke

nomination without consent the assignment with
from nominee consent from the assignee
(beneficiaries or executor)

3 Stamp Duty Not applicable Applicable (RM 10)

4 Recipient Natural Person. Any individual including

Legal entities such as natural person and legal
organization/association/ entities.
firm cannot be nominated

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PREVIOUS PRACTICE ON ASSIGNMENT (BEFORE NOVEMBER 2017)

The transfer of
Assignment is not
ownership from Type of allowable
allowed to be assigned
Certificate owner assignment is only
to Non Shariah
(Assignor) to another Absolute Assignment
Organization, Non
person or institution (100% )
Islamic Financial
(Assignee).

The Company allows If assignee dies, Takaful

Surrender (Takaful
one certificate to one benefit will be vested in
certificate) is allowed.
assignment form only. assignee’s estate.

Absolute Assignment is not allowed for third party

certificate since upfront Hibah on contribution has been
implemented. However, absolute assignment is allowable
for keyman certificate only.
1 NOMINATION VS ASSIGNMENT

2 SHARIAH ISSUES IN ASSIGNMENT

3 NEW ASSIGNMENT IN GETB

4 THE DIFFERENCES : OLD & NEW ASSIGNMENTS

 The Shariah Issues

1. Effect of Certificate Surrender on Assignment

2. Predecease Issue
3. Assignment as Medium of Debt Payment
ASSIGNMENT: ISSUES

1. Effect of Certificate Surrender on Assignment

Takaful Surrender Early termination of Takaful product

Certificate by certificate owner

I. Can assignor surrender the certificate?

II. If can, who possess the surrender amount?
III. Takyif fiqhi of assignment?
ASSIGNMENT: ISSUES

2. Predecease Issue

I. If assignee predeceases assignor, what happen to the

Assignment?
a. Do the assignment revoked? Or
b. The benefit will be given to the estate of Assignee?

Assignee’s heirs
Takaful
Benefits
Faraid

Died: 2024 Died: 2014 Died: 2020

ASSIGNMENT: ISSUES

3. Assignment as Medium
of Debt Payment
I. Person covered has Takaful certificate worth RM 100,000 Takaful benefits.
II. As collateral, person covered assigns his/her Takaful benefits to the bank
for the financing made amounting RM 20,000.
III. Suitable takyif fiqhi for this absolute assignment?
IV. Rules in paying debt should be observed.
V. The concern: Takaful benefits assigned > outstanding amount
VI. Although bank will only take an amount outstanding and return the balance,
the surface transaction (no. 1 to no. 2) will attract riba.
VII.Need to seek suitable and straight-forward solution
The Solutions
1. Effect of Certificate Surrender on Assignment
2. Predecease Issue
3. Assignment as Medium of Debt Payment
ASSIGNMENT: SOLUTIONS

1. Effect of Certificate Surrender on Assignment

Can assignor surrender the certificate?

• Assignor can surrender if he/she only assign Takaful benefits.

If can, who possess the surrender amount?

• Assignor
• because from legal POV, assignment has been terminated
automatically
• Even though assignment is irrevocable, it is still bound to the
status of Takaful certificate.

Takyif fiqhi of assignment?

• Conditional Hibah
ASSIGNMENT: SOLUTIONS

2. Predecease Issue

I. If assignee predecease assignor, what happen to the

Assignment?
a. Do the assignment revoked?
b. The benefit will be given to the estate of Assignee?

I. Assignee predecease assignor (short interval), who possess

Takaful benefits?

Participant Individual Fund (PIF) Assignor’s heir

(at the time of assignee dies)
Takaful
Benefits
Basic Sum Covered (BSC) Assignor’s heir
(plus remaining PIF)
ASSIGNMENT: SOLUTIONS

3. Assignment as Medium of
Debt Payment
I. Takyif fiqhi = Kafalah

•Kafil : tabarru’ fund

•Makful ‘anhu : person covered/debtor
•Makful lahu : bank/creditor
•Makful bihi : outstanding amount
1 NOMINATION VS ASSIGNMENT

2 SHARIAH ISSUES IN ASSIGNMENT

3 NEW ASSIGNMENT IN GETB

4 THE DIFFERENCES : OLD & NEW ASSIGNMENTS

NEW ASSIGNMENT: SHARIAH CONTRACTS

The Contracts Used in

New Assignment

Individual to Individual Individual to Financier

Assignment as medium of Assignment as medium of

charity/sadaqa debt payment

Hibah Kafalah

Assign Takaful Benefits up

Assign only Basic Sum Covered
to outstanding amount only
NEW ASSIGNMENT: ASSIGNABLE BENEFITS

No. Concerns Treatments Justification

1 Basic Sum Covered Assignable

Payable in the event  Provision by IFSA 2013

of Death or TPD
only
2 Participant Individual
Account / Participant Not assignable.
Unit Account
(“PIA/PUA”) It shall be distributed
3 Maturity Amount to assignor’s heir as  These amounts should be deemed as
faraid part of the estate of the assignor.

4 Bereavement Benefit

5 Badal Hajj Not assignable  The intention of this benefit is to

perform Hajj on behalf of Person
System wise Badal Covered
Hajj can not co-exist  To ensure that the assignment can
with Assignment cover debt sufficiently.
 To ensure that the treatment is applied
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the same for both types of assignment
NEW ASSIGNMENT: ASSIGNABLE BENEFITS

No. Concerns Treatments Justification

6 Compensation  No clear direction that the

on claim amount compensation should be given to
assignee. However, still
Not assignable. debatable.
7 Refund of
contribution It shall be distributed
to assignor’s heir as  These amounts should be
8 Cash payout faraid deemed as part of the estate of
the assignor.
9 Suspense
Amount
10 Double
Assignable if assign  Not Assignable if assign in exact
Indemnity
in percentage amount
Benefit

11 i-CABX Not assignable It is not payable from Tabarru’ Fund

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NEW ASSIGNMENT: ASSIGNABLE BENEFITS

No. Concerns Treatments Comment / Justification

ADB under  Benefit payable from Tabarru’

12 Assignable
medical rider Fund
 Assignee will be the one to sign
Under-aged
To reject assignment the assignment form
13 Assignee
to under-aged.  Simplify operational and legal
requirement

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NEW ASSIGNMENT: OTHER TREATMENTS

Two types of Assignment

• Individual Assignment
• Collateral Assignment

Certificate Surrender on Assignment

• Surrender is allowed
• For Collateral Assignment, assignee’s consent is required

Assignee Predeceases Assignor

• Assignment is considered revoked

Treatment on Nomination for Partial Assignment

• Nomination is allowed in Partial Individual Assignment ( <100%)

• Nomination is not allowed in 100% Assignment
1 NOMINATION VS ASSIGNMENT

2 SHARIAH ISSUES IN ASSIGNMENT

3 NEW ASSIGNMENT IN GETB

4 THE DIFFERENCES : OLD & NEW ASSIGNMENTS

OLD ASSIGNMENT VS NEW ASSIGNMENT

NO POINT OLD ASSIGNMENT NEW ASSIGNMENT

1 Contract Hibah Hibah for Individual
Kafalah for Collateral

2 Predecease Assignment is not revoked Assignment is revoked

3 Surrender Allowed Allowed

(Takaful For Collateral, Assignee’s
Certificate) consent is required.

4 Assignable Basic Sum Covered + PIA/PUA Basic Sum Covered

Benefits
5 Payable Event Death of Person Covered Death or TPD of Person
Covered
6 Nomination Not allowed Allow for Partial Assignment
only

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 Appendix
Example of Individual Assignment Form

Individual Assignment Form

In consideration of love and affection, I, the
ASSIGNOR named above, hereby absolutely,
irrevocably and unconditionally assign to the
ASSIGNEE all my rights, title and interest under the
above Certificate No. and all benefits and advantages
to be derived therefrom for the percentage of
%_____ of the Basic Sum Covered. I hereby confirm
and declare that I have not assign the Takaful
benefits in the Certificate to any person and the
ASSIGNEE hereafter shall be bound by the terms and
conditions contained in the said Certificate No.

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 Appendix
Example of Collateral Assignment Form

Collateral Assignment Form

I, the ASSIGNOR named above hereby assign
absolutely and irrevocably unto the ASSIGNEE
named below all my rights, title and interest (if any)
under the abovenamed CERTIFICATE, and all benefits
and advantages to be derived up to the outstanding
amount of the abovenamed financing. I declare that
the ASSIGNEE shall be bound by to the terms and
conditions contained in the said CERTIFICATE and
that I have not previously assigned the CERTIFICATE.

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 Appendix
Standard Operating Procedure on Assignment
Practice in GETB

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THANK YOU