Short answer
Not on ordinary insurance. Premiums for car, home, health or term life cover are spent and are no longer your wealth. A policy that builds a cash value, such as whole life or endowment insurance, is different: Hanafi muftis count what you have paid in as zakatable each year, but not any interest. Takaful donations carry no zakat.
Premiums for pure cover are an expense and carry no zakat. For a savings or endowment policy you can draw money back from, zakat is due on the premiums you have paid, since they are your money held by the company; any interest or gain above them is not lawful for you and should be given away. Conventional insurance itself is generally not permitted in the Hanafi fatwa, except where the law requires it.
The four schools agree on this.
Explanation
Insurance products fall into two groups for zakat:
- Pure cover: car, home, travel, health and term life insurance. You pay premiums and get nothing back unless you claim. The premiums are spent, so there is no zakat on them.
- Policies with a cash value: whole life, endowment and investment-linked plans, where part of each premium builds a sum you can surrender or receive at maturity. That sum is still your money.
For the second group, the approach commonly given by Hanafi muftis is to add the total premiums you have paid so far to your zakatable wealth each year. The interest or bonus the insurer adds is not yours in the eyes of the Sharia: leave it out of your zakat, and when you receive it, give it to the poor without hoping for reward. Some contemporary scholars use the current surrender value instead, which is often lower in the early years.
Takaful works differently. Your contribution to the risk pool is a donation (tabarru'), so it carries no zakat. In family takaful, the separate investment account in your name is yours and is zakatable like savings or shares, depending on how it is invested (see what takaful is).
A payout you receive, such as a claim or maturity sum, joins your wealth from the day it arrives and is zakated with it on your zakat date.
On whether you should hold such a policy at all, see is insurance haram and is life insurance halal. Products differ a great deal, so ask a mufti about your own policy.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Baqara 2:279
فَإِن لَّمْ تَفْعَلُوا۟ فَأْذَنُوا۟ بِحَرْبٍۢ مِّنَ ٱللَّهِ وَرَسُولِهِۦ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَٰلِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ ﴿٢٧٩﴾
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.
Only the principal is yours; added interest is not.
Sahih al-Bukhari 1403
Sahih... من آتاه الله مالا فلم يؤد زكاته ...
"Whoever is given wealth by Allah and does not pay its zakat, his wealth will be made into a serpent for him on the Day of Resurrection."
Wealth you own, wherever it is held, carries its zakat.
Where the ruling is recorded
- Radd al-Muhtar, Kitab al-Zakat, chapter on the zakat of wealth, section on debts. Money owed back to you is zakatable as a strong debt.
- Radd al-Muhtar, Kitab al-Buyu', chapter on riba. Interest gained is unlawful and is given away to the poor.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.