Egypt’s Dar Al-Ifta has clarified the ruling on zakat for money resulting from insurance policies, confirming that zakat is not due on such funds before they are actually received.
The ruling is based on the principle that money owed under an insurance policy is not considered to be in the policyholder’s complete ownership before it is received.
Accordingly, zakat calculations for the insurance funds begin after they are received, provided that the amount reaches the nisab and the other conditions for zakat are fulfilled.
What Is the Zakat Ruling on Insurance Policy Funds?
Dar Al-Ifta stated that zakat is not due on insurance policy funds until they are received because the money is not considered to be in the recipient’s complete ownership before receipt.
One of the conditions for zakat to become obligatory is complete ownership of the wealth. Therefore, funds that have not yet entered a person’s ownership are not subject to zakat during that period.
Why Is Zakat Not Due Before the Money Is Received?
The ruling is based on the fact that money payable under an insurance policy is not fully owned by the individual before it is received.
Zakat applies to wealth that a person actually owns. Once the funds are received and enter the person’s ownership, the relevant zakat rules begin to apply according to the required conditions.
Dar Al-Ifta Explains the Purpose of Zakat
Dar Al-Ifta explained that Allah prescribed zakat for profound purposes that benefit both individuals and society.
These purposes include purifying the soul from greed and miserliness and strengthening cooperation and social solidarity.
The Quran states:
“Take from their wealth a charity by which you purify them and cleanse them.” [Quran 9:103]
Zakat therefore contributes to spiritual refinement and reinforces values of generosity, cooperation, and social solidarity.
The Prophetic Teaching on Social Solidarity
Dar Al-Ifta also cited the saying of the Prophet Muhammad, peace and blessings be upon him and his family:
“The believers in their mutual love, mercy, and compassion are like one body.”
The hadith, narrated by al-Bukhari and Muslim, emphasizes the importance of solidarity, compassion, and mutual support among members of society.
When Does Zakat Become Due on Insurance Money?
According to Dar Al-Ifta’s explanation, the date on which the insurance funds are received marks the starting point for calculating zakat on that money.
Once the policyholder receives the funds, a new year begins for the wealth. Zakat is then paid when the amount reaches the nisab and the remaining conditions for zakat are fulfilled.
What Happens After Receiving the Insurance Funds?
After receiving the funds, the owner begins a new zakat year for the money.
Zakat becomes due once the wealth reaches the required nisab and the other conditions are met.
Simply being entitled to receive money under an insurance policy does not, according to this ruling, make zakat due before the funds are actually received.
Is Zakat Due on Money That Has Not Been Received?
According to Dar Al-Ifta’s clarification, zakat is not due on insurance policy funds before they are received, because complete ownership has not yet been established.
Once the money is received, the relevant zakat rules begin to apply, provided that the nisab and other requirements are met.
Conclusion
Egypt’s Dar Al-Ifta confirmed that zakat is not due on insurance policy funds before they are received, because the money is not considered to be in the recipient’s complete ownership until it is received.
After receiving the funds, a new zakat year begins, and zakat becomes due when the wealth reaches the nisab and the other required conditions are fulfilled.
Is zakat due on insurance money before it is received?
No. According to Dar Al-Ifta’s clarification, zakat is not due before the funds are received because complete ownership has not yet been established.
When does the zakat calculation begin for insurance money?
The calculation begins from the date the insurance funds are received.
What should the policyholder do after receiving the money?
A new zakat year begins for the funds, and zakat is paid once the nisab and the other conditions are fulfilled.
Why is zakat not due before receiving insurance funds?
Because the money payable under the policy is not considered to be in the person’s complete ownership before it is received.
