Answered by Mufti Mohammed Tosir Miah
Question:
I cancelled the insurance policies that I had now since I got to know that insurance is haram. I made my two policies in 2006.
The money in one of them was not retrievable unless I get certain illnesses, disability, etc.
As for the second, I retrieved the money that I deposited in it. The money that was invested in it was two parts: 50% safe saving and 50% growing investment.
Now, I got the money I invested + about 1400 extra pounds. Should I get rid of this extra sum? Or is investment in this way is not haram?
And should I pay Zakah now on the whole sum I received NOW or shall I wait until one year elapsed from receiving it, i.e. one year from now? Also, should I pay Zakah for the last six years since it was made? In other words, should I calculate the money that was presumably saved in it in the end of every year and 2.5% Zakah on it?
Answer:
If the investment is similar to a pension scheme then Zakat would only be obligatory when you have the money in your possession (like you have now) and also for the previous years as well. For purposes of easier calculation, it is better to pay the Zakat annually on the complete sum of your pension contributions. Zakat on these will only come into effect when you get access to these funds. (Fatawa Darul Uloom Deoband p.142 v.6 & Aapke Masaail p.361 v.3)
Finally, you are not required to give Zakat on the extra sum of money. It is unlawful money and it should be given to the poor without the intention of reward. (See Raddul Muhtar p.553 v.9).
Only Allah Knows Best
Mohammed Tosir Miah
Darul Ifta Birmingham