December 09, 1996
Mr. Ahmed Chohan
Durban Spice Works
P.o. Box 3748
Dear Brother Ahmed Saeed Chohan,
As Salamu Alaikum Wa Rahmatullahi Wa Barakatuhu,
First of all I would like to apologize for this inordinate delay in replying to your letter of 27th June,1996, but it was due to my overwhelming engagements and travels. I hope you will ovelook this delay.
Regarding your question about taking an insurance to cover the death it is pertinent to know that initially the transactions of insurance in vogue today are not permissible under Shariah there is an element of either interest or gambling. However, in the given situation of your query where a huge amount of inheritance is apprehended to go to the death duty which is in clear violation of the rules of inheritance laid down by the Holy Quran and Sunnah, taking of insurance to cover the death duty can be accepted as a lesser evil. If the insurance company is owned by the government taking of such insurance is undoubtedly permissible. However, if the insurance company is a private one it can be held as permissible on the ground that depriving the legal heirs of such a huge amount is a greater evil which can be avoided by opting for a lesser evil of insurance. But this permissibility will be subject to the condition that the amounts so recovered from an insurance company can never be availed of for the benefit of the insured or his legal heirs except to the extent of paying off the death duty imposed by the government. Therefore, if after satisfying the death duty there remains some amount it must be given to the people entitled to receive Zakah.
Wa As Salamu Alaikum Wa Rahmatullahi Wa Barakatuhu,
Mohammad Taqi Usmani