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f:443 -    Zakaat on life insurance
Country : Australia,
Name : Abdullah
Question:     On what things should we give Zakaat, apart from gold and silver?  Should we give Zakaat on the premium given on life insurance, which is given for a period of more than a year?  If so, what is the method of calculating Zakaat on that?
Answer:     Zakaat in an Islamic duty, which is Obligatory (Fardh) on every person who has either 60 gm 755 mg of gold or 425 gm 285 mg of silver.  This is the prescribed criterion of Zakaat.

Apart from gold and silver, it is Obligatory to give Zakaat on liquid cash, trade goods, shares, etc. provided they reach the limits described above and 1 year has passed on them.  In calculating Zakaat on liquid cash, the amount given as loan or kept in bank as fixed deposit or given to somebody for safekeeping, etc. will also be included

In the same way, if land, flats, apartment/shopping complexes, are given for hire, then if the income gotten from them reaches the limits described above and year passes on them then Zakaat should be given on that as well.  

Now the question of giving Zakaat on life insurance.  Please remember that in this situation, the ruling varies depending on the country.  India (and Australia) are Non-Islamic countries and the Jurisprudents have clarified that in a non-Islamic country, a Foul Sale (Ba’yah Fasida), i.e. a transaction between a Muslim and a non-Muslim, in which there is some change in the amount of money, is not a usury-based transaction, thus in India life insurance is permissible.  As given in Hidayah, Vol. 3, Pg. No. 86.

You are the owner of the amount of money in the life insurance policy, though it is not yet in your possession.  Thus, if that money meets the prescribed criterion, Zakaat must be given on that money as well as 1 year passes on it.  However, Zakaat should be given on the extra amount of money that the company will give you when you actually receive the money on it and 1 year passes on it.

In an Islamic country, as this kind of transaction comes under usury-based transaction, thus, in an Islamic country, life insurance is not permissible.  The gain received from it amounts to usury and expressly forbidden in the Shariah.  Those who take and/or give it are all sinners.

And Allah Most High knows best.

Mufti Syed Ziauddin Naqshbandi Qadri

[Shaykh ul Fiqh, Jamia Nizamia,
Founder-Director Abul Hasanaat Islamic Research Center]
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