Q: Brochures were sent to our musjid from a reputable zakat foundation. It stipulated that we must pay zakat on money that was put into my insurance fund. Is this correct?
A: Money given to insurance companies, as we know it, does not allow for a refund. The portion that you can get back is eligible for zakat. Monies that have left your possession and your control of such monies has been eliminated would not require zakat to be paid upon.
General rule: If ownership and control of monies do not exist, then zakat of it too does not exist.
Allah Certainly Knows Best.
There is a possibility that your question was misunderstood by us, if so, kindly resubmit.
(In the presence of our current financial institutions, there is no guarantee that you would get any of it back! So watch where you place your monies!)