Product Motive in Insurance Wqaf Transaction: Is it Allowed?

Abstract

One of the innovations on waqf is insurance waqf. This paper studies on the fully product motive (the type of insurance waqf with full financing when waqf is used as the main purpose and intention in conducting transactions). Due to the requirement that waqf property must remain perpetual, the insurance waqf contract in relation to the fully product can be considered as vague. Fully product is when the waqif makes waqf the core goal in carrying out insurance. These consequences arise if one day the insurance waqf participant cannot fulfill his obligation to pay the premium so that the dependent status becomes lapsed. In addition, there are several shariah provisions that need to be studied related to the fully product motive. This research will examine the fully product motive in insurance waqf in Indonesia and its conformity with shariah principles. The findings show that the motive for the fully product is not in accordance with several sharia provisions because there is the potentials for waqf assets to be lost if the waqif cannot fulfil the obligation to pay the premium properly and in insurance waqf, the waqif does not have the authority to freely determine the contents of the contract agreement because the insurance agreement is attached to the insurer’s requirements (adhesion. Moreover, the investment benefits that are distributed must not violate wills in Islamic inheritance law i.e distribution of not more than 1/3 except with the approval of the heirs. It is recommended that if an insurance participant wants to participate in an insurance waqf activity, his or her intention to have insurance must be placed at the beginning to fulfill the principle of insurable interest which must always be prioritized for all types of insurance. In addition, any endowment of insurance or investment benefits must be Shariah compliant.