Is it permissible to take the insurance money received from the university after a student's death to pay the remaining tuition fees and donate the rest as a perpetual charity (Sadaqah Jariyah)?

If the university subscribes students to commercial health insurance, they are not permitted to benefit from it beyond the amount of their subscriptions.

If they receive an amount exceeding what they paid, they must dispose of this excess by giving it to the poor and needy, unless they themselves are poor and in need, in which case they may take from it according to their necessity.

A poor person is one who does not possess what suffices their essential needs.

As for settling the university's debt from insurance amounts, there is no harm in it, because what is rightfully due is only the amount that was subscribed, and the excess should not be benefited from except in case of need.

The ruling differs if the insurance is cooperative and mutual (takaful); in this case, there is no harm in benefiting from any amount given, whether to settle the debt of the deceased or for other purposes.