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
AMJA's 2019 Imams' Conference took the opposite view for commercial policies: the payout is “the right of his or her heirs”, and a beneficiary who received it should return it to the estate. Naming the estate makes faraid straightforward, but do not assume naming a person avoids it. 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 schools do not differ on the frame — the estate is what the deceased left, worked through in the agreed order, and debts come before bequests by the agreement of the jurists. Whether an insurance payout sits inside that frame is a modern question, and named bodies differ: the Islamweb Fatwa Centre treats the whole payout as estate for all the heirs, the Egyptian Dar al-Ifta treats a named beneficiary as taking in his own right. Both agree that where no beneficiary was named the money is divided by the fixed shares. And the bodies that prohibit commercial insurance separate the premiums the deceased paid, which are estate, from the excess the insurer adds, which they say must be disposed of, not inherited.
No school ruled on this instrument; named present-day bodies differ. Reviewed 2026-09-01. Full positions, evidence and sources — Do life insurance proceeds enter the estate?.
Related madhhab issue: Is commercial life insurance permissible?.
Related madhhab issue: Assets that pass outside the estate — are they part of the tarikah?.
Making an Islamic will in Canada — province by province, and what makes one valid where you live →
This is legal information only. For advice on your own circumstances, speak to a lawyer.
Citations & sources
Every factual claim on this page traces to a source below. Details change — check the original source before relying on any figure, fee or legal position. Anything under “further reading” is related material, not a source for what is stated here.
- Shari'ah Standards — AAOIFI
- International Islamic Fiqh Academy — Organisation of Islamic Cooperation
- 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
- Naming estate vs person as beneficiary ontario — Treadstone Law
- Group life insurance no named beneficiary ontario — Treadstone Law
- Are life insurance proceeds taxable in canada — Treadstone Law
- Insurance trust ontario life insurance proceeds — Treadstone Law
- Wills & estates practice — Treadstone Law