What is the ruling on life insurance, and does it fall under the category of usury (riba)? What is the difference between legal blood money (Diyya Shar'iyya) and compensation in cases of loss of life due to accidents?

The Islamic Fiqh Academy has clarified that commercial insurance involves both riba al-fadl (interest by excess) and riba al-nasi'ah (interest by delay). If the company pays the insured more than what he paid, it is riba al-fadl. If it pays it after a period of time, it is riba al-nasi'ah. Both are forbidden. Diyah (blood money) is a legally stipulated sum for offenses against life or limb, and it is primarily obligatory upon the 'aqilah (male agnates) in cases of accidental killing. As for the compensation paid by an insurance company under a life insurance contract (if it is commercial, then it is forbidden), it is not considered diyah. If it is under third-party liability insurance, it is not diyah because it is not legally obligatory; rather, it is a contractual obligation within an agreed-upon sum.