Is Deducted Life Insurance Money Halal?

September 4, 2010

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Question
Can one take the money of Life insurance (when the time comes) when the money that is used to pay for this insurance is automatically deducted from one’s pay?

Scenario: A person (employee) makes $2000 per month and whether he/she likes it or not $20 of that money is going to be going towards life insurance per month. In the event this employee dies then a larger some of money will be given to the beneficiary (usually a spouse or child). Is it halal to receive this money?

Answered by: Mufti Abdurrahman ibn Yusuf

Assalamu alaykum

In the Name of Allah, Most Compassionate, Most Merciful,

Assalamu alaykum

This money received from such a life insurance is lawful and the inheritors can benefit from it, since the deceased did not enter into it voluntarily, so it will be treated like a gift when it is received.

Mufti Nizamuddin has added in his Fatawa that the original capital amount will be distributed among the heirs according to the Islamic rules of inheritance (mirath), and the remaining amount will be received by whosoever has been designated as the beneficiary in the original contract. (Muntakhabat nizam al-fatawa vol. 1, page. 213)

Based on this, the beneficiaries could agree to allow the whole amount to be distributed among them according to Islamic law.

And Allah knows best.

Mufti Abdurrahman ibn Yusuf

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Dr. Mufti Abdur-Rahman ibn Yusuf

Dr. Shaykh Abdur-Rahman ibn Yusuf Mangera is a British Muslim scholar educated in both the Islamic and Western traditions. He memorised the Qur’an by heart and graduated from the Darul Uloom seminary Bury, UK, and later earned a specialised licence to issue fatwa (legal responses) at Mazahir ‘Ulum Saharanpur, India. He earned his BA from the University of Johannesburg and completed his MA and PhD in Islamic Studies from the School of Oriental and African Studies in London. He holds an honorary fellowship at The Royal Aal al-Bayt Institute for Islamic Thought, Amman, Jordan. Shaykh Abdur-Rahman has the unique experience of serving as an imam in Muslim communities on both sides of the Atlantic, eight years in Southern California and over five in the great city of London—and his continued work as an international speaker and lecturer enables him to address and offer pertinent advice on current challenges that face Muslims in the West. He is the founder of Whitethread Institute, a post-graduate insititute for Islamic scholars. He is an avid traveller and continues to teach hadith and work on scholarly publications through White Thread Press (www.whitethreadpress.com). Many of his lectures are available on www.zamzamacademy.com and his courses through Rayyan Institute (www.rayyaninstitute.com).