Existing Life Policy Shariah and Beneficiary Review Checklist
A family may already own a life policy before asking whether its structure, purpose and beneficiary arrangements fit its Shariah approach. An existing-policy review should begin with the actual contract and current need, not an abstract yes-or-no answer about all insurance.
This checklist is general information, not insurance, legal, tax, estate or Shariah advice. Do not cancel cover before replacement, underwriting and consequences are professionally assessed.
1. Identify the policy and parties
Record insurer, product, policy number, owner, life assured, premium payer, beneficiaries, cessionary and adviser. Verify the policy is in force.
2. State the original purpose
Record whether the policy supports dependants, debt, estate liquidity, a business agreement, funeral costs or another need. Compare that purpose with the family’s current circumstances.
3. Reconcile benefits
List death, disability, severe illness, income, funeral and other benefits, definitions, waiting periods and exclusions. Separate guaranteed amounts from illustrations.
4. Review premiums and affordability
Record current premium, escalation, review rights and expected future cost. Test affordability after retirement, business change or loss of income.
5. Examine cash or investment values
For policies with values, identify underlying funds, fees, guarantees, surrender terms and Shariah screening. Do not assume a policy label describes every underlying asset.
6. Review ownership and cessions
Confirm whether the policy is personally, jointly, company or trust owned and whether it is ceded as security. Ownership can affect control, proceeds, tax and estate planning.
7. Verify beneficiaries and nominations
Obtain the provider’s current record and checDecision record
Document the options considered, underwriting status, replacement risks, professional advice, Shariah opinion and final decision. If the family retains a policy despite an unresolved concern, record the reason, mitigation and review date. If it changes cover, preserve proof that the new arrangement became effective before the old one ended.k legal names and relationships. Coordinate nominations with the will, dependant needs, debts and qualified Islamic succession advice.
8. Review business use
For key-person or buy-and-sell funding, reconcile the policy with the agreement, valuation, ownership, premium payer and tax advice. Cover without a valid operating agreement may not solve the business need.
9. Obtain Shariah analysis
Provide the scholar or adviser with the contract, benefit structure, investments, fees, uncertainty, claims and alternatives. Record the methodology and opinion date rather than relying on a generic online statement.
10. Compare lawful alternatives
Consider available Takaful, group benefits, savings, debt reduction and other risk controls. Compare cover quality, cost, availability and transition risk.
11. Control replacement or cancellation
Do not cancel until new cover is issued, exclusions and premiums are understood and legal or tax effects are reviewed. Record surrender, waiting periods and loss of guarantees.
12. Keep the annual review file
Store the schedule, contract, statements, nominations, cessions, advice, Shariah evidence and decision. Review after family, health, debt, business or estate changes.
Official starting points
Practical outcome: the family should understand the current policy, need, cost, ownership, beneficiaries, alternatives and Shariah reasoning before retaining, replacing or cancelling it.
