IslamQA

Taking out life insurance to save tax

Answered according to Hanafi Fiqh by Muftionline.co.za

Q: Here in South Africa when a person passes away he has to pay 20% estate duty of his total estate to the government. Many a time this amount runs into the millions and is an extremely exorbitant amount to pay. I was recently advised by a colleague to take out life insurance so that upon my death the policy pay out will cover the estate duty. This colleague also told me that many people are doing it to cover the estate duty and that he knows ulama that are in favour of it. Please advise if doing this will be permissible?

Bismillaah

A: Irrespective of the niyyat this is a combination of riba and gambling.

And Allah Ta’ala (الله تعالى) knows best.

 

Answered by:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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