Answered by Shaykh Abdurrahman ibn Yusuf Mangera
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?
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.
[Shaykh] Abdurrahman