Understanding the Khairat Kematian Fund in Malaysia: Helping to Ease the Financial Burden of the Bereaved

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The Increasing Death Rate in Malaysia: Pre-Need and As-Need Funeral Services Explained

Hey there! Let's talk about a topic that nobody likes to discuss - death. But the truth is, it's a natural part of life and we all have to face it one day. In Malaysia, the death rate has been steadily increasing since 2004, and in 2019 it reached a high of 5.223 deaths per 1000 people (according to Macrotrends, 2020).

When someone passes away, it's a tough time for their loved ones. For Muslims, there are certain religious customs that must be followed. That's where bereavement care services come in. These services help with tasks like notifying family members, arranging for burial, and providing financial support to the family (Katan and Nasrijal, 2020).

Funeral services can be divided into two categories - pre-need and as-need. Pre-need services are for people who are still alive and want to plan their funerals in advance. As-need services, on the other hand, are for people who have already passed away (Khalil, 2017).

It's important to note that funerals and burials in Malaysia are not free. While the government does provide public burial plots, there are still costs associated with the entire process. There are two types of bereavement and funeral services available for the Muslim community in Malaysia. The first is provided by the mosque and is financed through the Community Death Fund Association (Khairat Kematian). This fund is created by contributions from the local community, either through annual instalments or one-time payments. The second option is to use private institutions that provide pre-need funeral plans (Nasrijal et al., 2019).

Funeral expenses are on the rise in Malaysia, with the cost of burial plots and land constantly increasing. That's why it's becoming increasingly important to consider pre-need funeral plans and the Khairat fund. These financial arrangements can help cover all the expenses related to the funeral and burial, which can help ease the burden on grieving family members (Katan et al., 2019). The Khairat fund can be even more effective if it's digitized and institutionalized. Ismail et al. (2019) suggest that Takaful operators can help improve the fund's usage and sustainability, thanks to their expertise in governance and regulation.

In Malaysia, the Muslim community has a common practice of offering funeral assistance to the family of the deceased. This is done through a fund created by mosques called "Khairat Kematian," which covers burial expenses and provides benefits to the deceased family members. The fund is managed by a committee of the mosque and members of the community can contribute to it to attain this service. This practice helps to ease the financial burden on the family of the deceased. However, for the poor section of society, contributing to the fund can be a burden.

Funeral Poverty and Urbanization in Malaysia: The Scarcity of Public Burial Land

Funeral poverty is a major issue in Malaysia, especially in urban areas where there is a shortage of public burial land. The scarcity of land is due to the rapid modernization and development in these areas. This has made it difficult to develop new cemeteries, and the existing ones are becoming overcrowded.

Islamic bereavement care services are essential for pre-funeral arrangements. However, there are only a few Islamic bereavement care services in Malaysia, and most of them are not profit-oriented. The concept of the Khairat fund is similar to the Takaful scheme, but the participation of Takaful Operators (TO) is low. This is due to the opposing objectives of the Mosques and TOs. TOs are profit-oriented and have to consider the interests of their shareholders and stakeholders, which makes it difficult for them to provide the service of Khairat fund. Additionally, the high operating costs and lengthy procedures make it less appealing for TOs to participate in the fund.

Overall, the Khairat fund is a positive practice that can help to ease the financial burden on the family of the deceased. However, there is a need for more Islamic bereavement care services in Malaysia, especially in urban areas. This can help to address the issue of funeral poverty and provide the necessary pre-funeral arrangements for the deceased.

The Challenges Faced by the Khairat Kematian Fund in Malaysia: Sustainability and Public Misconception

The Khairat fund product faces several issues, according to a study by Nasrijal et al. (2019). These issues include limited public awareness, public perception, infrastructural and geographical barriers, decreasing human resources, different practices and costs in different states, public misconception towards commercialization of Khairat fund, and sustainability of the product.

Public awareness of the Khairat fund is limited because it is not a service that people regularly demand or have a periodic desire for. Additionally, pre-arranging funeral services is unfamiliar among Muslims, making it unattractive to them. Public perception towards funeral services being free of charge poses challenges for service providers, as families may not understand that they are responsible for the costs.

Difficulties due to infrastructural and geographical barriers arise when the deceased is not subscribed to the pre-need funeral services, and the family has to bear higher costs. The decreasing interest of involvement in funeral management by the Muslim community is due to the stigma associated with death and younger generations being unwilling to take on the responsibilities.

Different practices and costs in different states pose challenges for service providers due to the lack of uniformity in funeral management. Finally, the misconception of commercializing funeral services arises when charges are levied for the services, but in practice, the money charged is used to buy takaful plans to cover costs, and the management fees are for handling the whole process. The Islamic Religious Council of different states provides approval for these services.

The Need for More Islamic Bereavement Care Services in Malaysia: Addressing Funeral Poverty and Urbanization

Khairat Kematian is a type of mini co-operative that provides assistance to its members during tough times. However, there is potential for it to be transformed into a formal co-operative to provide even more benefits, such as offering small loans to those in need. The success of such a co-operative would depend on the skills and knowledge of community leaders who would be responsible for leading it. However, it can be challenging to find volunteers with the necessary management skills.

Takaful Operators and the Khairat Kematian Fund: Achieving Effective Digitization and Institutionalization

To address this issue, Ismail et al. (2019) suggest that partnering with a Takaful operator can improve the effectiveness of Khairat funds and have a greater impact on society. While people may have more trust in the management of the mosque to handle the funds, the expertise of Takaful in underwriting can help to improve efficiency and financial sustainability. Takaful operators have the flexibility to offer services to different customer categories and can use their distribution capabilities to reach more people in society. Regulating Takaful operators can ensure that the funds are properly used and invested in a way that generates revenue to sustainably assist those who cannot afford to pay for the service.

5 Ways to Improve Public Perception and Sustainability of the Khairat Fund

1. Boost Public Awareness: The organization can improve public awareness of the Khairat fund through public seminars and workshops, as well as media references and word of mouth. Social influence has a positive relationship with increasing intention to buy Takaful products.
2. Enhance Trust: Trust is a key factor in improving public perceptions of the Khairat fund. The organization can take help from regulatory bodies like JAKIM and State Islamic Religion Council to build a positive public image towards modernizing the fund and funeral services. Getting certified by JAKIM can increase public confidence, and the importance of preparing for one's own funeral should be highlighted.
3. Segregation of Customers: As an online product, participation in the Khairat scheme can be separated for Muslims and non-Muslims in order to avoid complications. Participation can be segregated for ease of operations, as the scheme pays financial benefits and arranges funerals and burials for Muslims, while only providing financial benefits for non-Muslims.
4. Sustainable Investments: The pooled fund of Khairat can be utilized through investments, and Islamic Mutual fund can be a feasible option to sustain the fund in the long run. Even if payments from customers are irregular, the return from the mutual fund can help to cover the deficits, and managing a good mutual fund can also provide customers with a return on their contributions.
5. Collaborate with the Mosque: Co-operation with the mosque to educate about the Khairat fund will help the community to understand the importance of the product, and present the product as a complimentary, not a competition of mosques. This collaboration will create a positive public image for the organization.

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