It depends what you are trying to achieve. Naming a person keeps the proceeds out of probate and away from creditors; naming the estate brings them into the pool the faraid shares apply to.
The Canadian position
Proceeds paid to a named individual are generally received tax-free and bypass probate. Proceeds paid to the estate are exposed to probate tax and to creditor claims.
The Islamic position
Only proceeds that enter the estate are divided by the shares. If the intention is that insurance money follow faraid, naming individuals in the exact fractions is fragile — the fractions change with who survives.
Views on conventional insurance itself differ among scholars; where takaful is unavailable, this is a question to put to a scholar rather than resolve alone.
The four Sunni schools are not recorded as differing materially on this point in the sources reviewed. Where your own case turns on it, put it to a scholar of your school.
General information, not legal or religious advice. Inheritance depends entirely on the exact family circumstances. Confirm the Canadian position with a lawyer in your province and any religious ruling with a qualified scholar.
Citations & sources
Every factual claim on this page traces to one of the references below. Legislation and dollar thresholds change — verify against the primary source before relying on any figure.
- Shari'ah Standards — AAOIFI
- International Islamic Fiqh Academy — Organisation of Islamic Cooperation
- Research Papers — Cambridge Muslim College
- Research — Cambridge Muslim College
- Academics — Islamic law and theology curriculum — Zaytuna College
- Encyclopaedia of Islam — Brill
- Death of an RRSP annuitant — Canada Revenue Agency
- Death of a TFSA holder — Canada Revenue Agency
- What to do when someone has died — Canada Revenue Agency
- Beneficiary right to see a copy of the will ontario — Treadstone Law
- Atlantic immigration program employer designation required — Treadstone Law
- Non resident beneficiary clearance certificate delay ontario — Treadstone Law
- Vexatious litigant designation family court ontario — Treadstone Law
- Rolling retiring allowance into rrsp room — Treadstone Law
- Cra seizing rrsp ontario — Treadstone Law
- Wills & estates practice — Treadstone Law