Banking: Using Life-Insurance Payouts to Cover the Deceased’s Debts

Practical Laws of Islam as per the teachings of Imam Khamenei

Banking: Using Life-Insurance Payouts to Cover the Deceased’s Debts

English:

Question #1938:

In accordance with the provisions of the life insurance policy, the insurer should pay the beneficiaries — determined by the insured — a sum of money at the event of his death. Should the estate of the deceased not be sufficient to pay off his debts, is it permissible for the creditors to get back their money through the compensation the insurance company would pay?

Answer #1938:

This is governed by the provisions of the insurance contract. If the agreement was that the company, on the death of the insured, pays the amount to his appointed beneficiary/ies, the paid amount cannot be treated as part of the deceased’s estate. It goes to the appointed beneficiary/ies.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Banking