Answered by: Maulana Javed ibn Nazir Kachhalia
Is it possible to purchase life insurance and to nominate a person/persons to receive a lump sum of money after a person has died
Is it possible to receive the money if the source of the money was unknown and then later disclosed?
The answer to this question can be found on our website. This is the link: http://daruliftabirmingham.co.uk/life-insurance-money/
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With regards to life insurance, the correct view is that it is impermissible in Islam. There are three reasons for the impermissibility of this:
The Holy Prophet of Allah Sallallahu Alahi Wasalam has said, “To take one dirham of interest knowingly is worse than committing adultery 36 times.” (Mishkaatul-Masaabeeh p.246 v.1)
There is an element of deception. The insurance contract contains uncertainty due to the amount being paid is not fixed and the time it will occur also being uncertain.
The Prophet of Allah Sallallahu Alahi Wasalam has “forbade deception and uncertainty in transactions.” (Sunan Tirmizi p.233 v.1)
Insurance policies require payment of money, thereafter if the following mishaps were to occur a payment would be made. This is a pure form of gambling. (Raddul Muhtar p.577 v.9)
Therefore the lump sum one has received a life insurance should not be included in the distributing of the deceased’s wealth. However the money you gave in instalments every month is considered halal, hence, it is lawful to use that amount. The haraam insurance money should be given to the poor without the intention of reward. (See Raddul Muhtar p.553 v.9).
Only Allah knows best.
Written by Maulana Javed ibn Nazir Kachhalia
Checked and Approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
This answer was collected from DarulIftaBirmingham.co.uk, which is run under the supervision of Mufti Mohammed Tosir Miah from the United Kingdom.