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Fatwa CenterLife insurance and inheritance
Question
A Muslim died and his family is going to take the money from his life insurance. Is this money subject to inheritance rules; in other words is this treated as inheritance?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
If the source of this money is life insurance, then it is unlawful as stated by the majority of the Muslim scholars. In this case, what is lawful for the inheritors is to take back what their deceased relative had actually paid to the insurance company. It is unlawful for them to take anything else unless their intention is to take that Riba (interest and/or usury) from this Riba Company to help in righteousness (for some good cause). But it is unlawful for the inheritors to profit from this personally. Allaah Says (what means): {…but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).}[Quran 2: 279]
Allaah Knows best.
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