Do I Have to Pay Zakat on Life Insurance?
Hanafi Fiqh
Answered by Mawlana Ilyas Patel
Question
My husband and I have life insurance intended for our severely disabled child’s trust. Is it true that life insurance must be divided among all heirs? Due to government restrictions, most of the trust may be limited to government-approved expenses, making zakat payments difficult. If zakat cannot be taken from it now, what is the ruling for paying zakat on it after our son’s passing?
Answer
In the Name of Allah, the Most Merciful and Compassionate
I pray you are in good faith and health. Thank you for your question. May Allah reward you for your service in raising your child.
Life insurance is impermissible. If one takes out life insurance, it is only permissible to take the premiums paid over the policy’s period. They will be included in the deceased person’s estate and divided among the heirs accordingly. Any surplus must be given to charity without the intention of receiving any reward.
The Muslim jurists are unanimous that most prevailing classes of insurance are not permissible under Islamic Law. In the case of such insurance, the insured is entitled only to the premiums he paid over the period of insurance. The surplus will be given to charity without any reward in return.
Zakat on Child Trust Funds
Zakat must be paid on the Child Trust Fund every year if the child has reached puberty. However, it is permissible to delay the payment upon accessing the funds and obligatory to backdate and pay Zakat for the previous years.
According to the relied-upon position, Zakat is supposed to be given without undue delay, and delaying it unduly without excuse is sinful. An undue delay is delaying payment beyond a year.
[Ibn ‘Abidin, Radd al-Muhtar]
I would like you to go through the valuable answers and links below. In sha Allah, you will receive guidance and direction.
Related
- Receiving an Amount Equal to Ones Paid Life Insurance Premiums Minus Losses
- Zakat on Child Trust Fund
- Question on Child Trust Fund
- Life Insurance
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I pray this helps with your question.
Wassalam,
[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Abdul-Rahim Reasat
Mawlana Ilyas Patel is a traditionally-trained scholar who has studied in the UK, India, Pakistan, Syria, Jordan, and Turkey. He started his early education in the UK. He went on to complete the hifz of the Quran in India, then enrolled in an Islamic seminary in the UK, where he studied the secular and ‘Aalimiyya sciences. He then traveled to Karachi, Pakistan. He has been an Imam in Rep of Ireland for several years. He has taught hifz of the Quran, Tajwid, Fiqh, and many other Islamic sciences to children and adults onsite and online extensively in the UK and Ireland. He taught at a local Islamic seminary for 12 years in the UK, where he was a librarian and a teacher of Islamic sciences. He currently resides in the UK with his wife. His interest is a love of books and gardening.