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Takaful: A Practical Solution for Settling Debts After Death

When someone passes away, any outstanding debts they leave behind must be paid using their assets, even if it means using up everything. This ensures their obligations are fulfilled before the remaining wealth, if any, is distributed to their heirs. However, if the deceased leaves no assets, their family members are not obligated to settle the debts.

The Prophet Muhammad SAW emphasized the sanctity of wealth, saying:

إِنَّهُ لَا يَحِلُّ مَالُ امْرِئٍ إِلَّا بِطِيبِ نَفْسٍ مِنْهُ

“It is not lawful to take a person’s property unless they willingly consent to it.” (HR Ahmad, authenticated by al-Albani in Sahih al-Jami’).

While the family is not obligated, it is still highly encouraged to help settle the debts as a noble deed and to ease the deceased’s burden in the hereafter.

Why Takaful is Important for Debt Relief

Takaful can serve as a reliable financial safety net to ensure that debts are settled without burdening the family. Here’s how it works:

1. Takaful with a Nominee

If you have a trustworthy family member, you can nominate them to receive the Takaful payout. They can then use this money to settle your debts.

2. Takaful Without a Nominee

For those who prefer a more structured and professional approach, consider a Takaful policy without a nominee. Instead, prepare a wasiyyah (will) and appoint a wasi (executor).

• Why no nominee?

Without a nominee, only someone with a Letter of Administration or Grant of Probate can claim the payout. This ensures the funds are used as intended, primarily to settle debts.

• Role of the executor:

The executor named in your wasiat is legally bound to follow your instructions, including settling debts as a priority. If your estate is insufficient, the Takaful payout can cover the remaining debt.

Steps to Take

1. Prepare a Wasiyyah (Will):

Write a wasiat to specify how your debts should be handled. Appoint a trusted executor (wasi) to carry out your wishes.

2. Choose the Right Takaful Plan:

Select a Takaful policy that aligns with your needs. If the purpose is debt repayment, consider leaving the policy without a nominee to ensure proper estate management.

3. Inform Your Family:

Communicate your plans to your family so they understand your intentions and how the Takaful will be used.

A Proactive Step Towards Peace of Mind

Takaful isn’t just a tool for protection; it’s also a way to ensure that your financial responsibilities are handled after you’re gone. By planning ahead with a wasiat and the right Takaful policy, you can provide relief to your loved ones and help them focus on honoring your memory without the stress of financial burdens.

Let’s make it easier for those we leave behind, because no one should inherit debt when they inherit memories.