Islamic Rulings for Sisters
Mufti Fuzayl Raza Attari al-Madani
The inheritance status of insurance money
Q: What do the scholars of Islam say regarding the following: My father had taken out a life insurance policy and appointed me as his nominee. Around one and half months ago, by the will of Allah Almighty, my father passed away. I wish to find out whether I alone am rightful to this insurance money or whether the other inheritors are too.
بِسْمِ اللّٰہِ الرَّحْمٰنِ الرَّحِیْمِ
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: Firstly, keep in mind that taking out a life insurance policy is forbidden and a major sin. This is because the amount deposited by the policyholder is considered a loan, upon which it is conditioned that he will earn profit, whereas placing a condition of earning profit on a loan is a form of usury, and usury is prohibited and an act which leads to Hell. There are severe warnings regarding this in the Quran and Hadith.
If a person takes out an insurance policy, it is necessary upon him to cancel it at once and repent sincerely in the court of Allah Almighty. Moreover, he can only take back the original amount that he deposited for the life insurance, and it is not permissible to take any surplus usurious amount.
If the policyholder has passed away, the nominated person should make a claim and only take the sum that was originally deposited by the policyholder, leaving any interest-based amount. This money should then be divided among the inheritors, as stipulated by Islamic Law.
It is not the case that only the nominated person will receive the money, as the reason for nominating a person is not to transfer ownership to them, rather the purpose of this is that in the event of the policyholder’s death, this person receives the amount from the company and distributes it to the inheritors of the deceased. Therefore, in the above-mentioned scenario, you will not be the sole beneficiary of your father’s original life insurance policy amount, rather all of the deceased’s inheritors have a right over it.
Remember that if a person has already taken receipt of the usury-based amount, it is necessary upon him to repent and also give away this money to a poor person who is rightful to zakat, without the intention of receiving reward.
Note: Another type of insurance is general insurance, which is taken out for possessions (i.e., non-living things), and this is also forbidden and a sin. This is a form of gambling and is oppressive, because if the policyholder’s item is damaged during the policy’s period, the company pays for repairs or a replacement, and like this the policyholder benefits because if the damage is major, he receives a larger amount than he paid into the policy. Conversely, if the policyholder’s item remains protected from the damages covered by the policy during the policy’s duration, he does not receive any of his deposited amount and the company benefits. This is gambling. Moreover, holding the company responsible for damages not caused by it is a form of injustice and oppression, and both gambling and oppression are forbidden.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
Comments