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conventional life insurance policy. There are situations where a nominee in a Family Takaful
inherits the property of the participant while depriving other legal heirs. This is why some
experts have opined that a nomination clause violates the principles of both mirath (inheritance)
and wasiyah (bequest); hence, the implementation of such contractual stipulations in Family
Takaful should take into consideration the limits set by the Lawgiver (Allah). Whether the
Takaful benefit in the nomination will be regarded as hibah (gift) or part of the estate of the
deceased will depend on how the nomination clause is construed (Abdullah & Abdul Aziz, 2010);
hence, proper drafting is required to avoid transposing conventional legal principles that may
not perfectly fit into the Shari'ah principles relating to Takaful.
There are other contractual issues relating to guarantees, indemnity subrogation, insurable
interest and utmost good faith. Though some of these concepts have some Islamic bearings, they
are originally known to the conventional insurance practice. “Insurable interest itself ensures that
a client can obtain insurance only if susceptible to a loss for which insurance is sought. Indemnity
implies that a claim can be made only to the extent of the actual financial loss to the insured.
Subrogation entitles insurers to claim from a third party on behalf of the insured. Indemnity and
subrogation together ensure compliance with the requirements of insurable interest. The utmost
good faith clause is required for the disclosure of all material facts; a condition commended in
Islam.” (Hussain, 2009, p. 77). The concepts have since been transposed into the Takaful scheme.
There have been cases of manipulations of contractual clauses to avoid honouring claims against
the Takaful companies. This is where it is important for the regulatory and supervisory authority
for Takaful in any jurisdiction to ensure the Takaful participants are adequately protected. Every
legislation relating to financial services, particularly Takaful in this case, must pursue the
principal regulatory objective of fostering fair, responsible and professional business conduct of
the TOs while striving to protect the rights and interest of financial consumers as clearly
highlighted in
10 [2017] 10 MLJ 506.