What is the religious ruling on Revocable Insurance Nomination?

In insurance, a nomination is the act of designating the persons or entity to receive the proceeds of an insurance policy in the event the policy is triggered (e.g., the policyholder's death in the case of life insurance). This ensures that the policyholder's beneficiaries will receive the benefits of the policy without delay or complications.

Previous fatwas issued (1971, 1998) stated that proceeds from insurance policies form part of a deceased Muslim’s estate and is thus subject to Faraid. The fatwa in 2007 allowed for nominations to be made and these would be considered as hibah. However, these nominations had to be irrevocable which came with limitations that posed difficulties (masyaqqah) for the policyholder.

The latest Fatwa on Revocable Insurance Nomination (2012) allows for Muslims to make nominations for their policies and that these nominations can be amended as the policyholder see fit. The revocable nominations are considered a contemporary form of hibah which is in accordance with Islamic principles.

The Fatwa Committee has declared that nomination for revocable insurance is a form of contemporary hibah. It is a new form of estate planning that is aligned with principles of the religion.

To read more on the Fatwa on Revocable Insurance Nomination (2012), you may visit the Office of the Mufti website:

www.muis.gov.sg/officeofthemufti/Fatwa/English-Revocable-Insurance-Nomination