For many in Western societies the concept of obtaining life insurance is something that one may not even think twice about. It is many times offered as part of a benefit package as well as many companies selling private life insurance policies. Many families consider it a safety net that if in the event something happens to the heads of households the children and other surviving family members are protected and taken care of with a financial stipend.
Recently I was watching an Islamic talk show which featured Saudi scholar Salman Al Oadah. The scholar was taking calls from viewers who had questions on a multitude of subjects about Islam. One of the callers wanted to know if life insurance is considered haram (forbidden). I was quite surprised to hear this point of view and in turn learned from my Saudi spouse that there is a large debate on this topic. Scholars are divided on their point of view whether life insurance is haram or allowable. Salman Al Oadah told the caller he was still doing his own research on this topic and had not reached a consensus yet himself. He said part of the quandary he was facing in making his decision was that life insurance is a concept that has been introduced and instituted in modern times and not during the writings of the Quran.
Wanting to learn more on this topic, I then did what I normally do in these cases…I went to the net. If one does a google on life insurance and Islam, pages of information and various views and perspectives will come up.
The Aljazeerah Info Center says that life insurance is permissible but with certain caveats in place. I believe the most pertinent info from this web site is as follows:
There are two main types of life insurance: term policy and endowment policy. The term policy involves the payment by the insured of modest premiums over an agreed period, say, 20 years, in return for the benefit of his family receiving an agreed large sum of money in the case of his death during that period.
If the insured remains alive at the end of the policy, it lapses and he gets nothing. What the insured actually buys with his payments is the peace of mind he gets from the knowledge that should he die, his dependants will have a large sum of money to see them through life until, say, his young children come of age and are able to look after themselves.
The endowment policy involves the payment of larger premiums which are invested by the insurance company. When the policy matures, the insured receives the sum assured as well as any share of profits to which he may be entitled under the terms of investment made on his behalf by the insurance company.
Both types are permissible from the Islamic point of view, as explained by Professor Al-Zarqa, provided that the insured makes sure that the insurance company invests in legitimate business. If the insurance company invests in what Islam forbids, then taking out its policies becomes forbidden as a result.
There are many more links which can be included but I think I’ve provided enough which illustrate that this remains a debatable topic for sheiks, clerics and those administering shariah law. So my ending question is for those who are muslim, what are you views? In today’s world, is life insurance haram or allowable and why?
Dear Sister Carol…
Assalamu alaikom. Why do I have a feeling that this will be another never-ending debate
Anyway, here’s my 2 cents and insha’Allah it’s of benefit to my brothers and sisters…
Actually, rather than me type my own words here (which wouldn’t be as meaningful), I’ll simply paste below the words of learned scholars (including evidences from the Qur’an and Sunnah) may Allah bless you all.
But one last point while reading… keep in mind that insurance involves Giving ‘Money’ (a certain amount) and Receiving ‘Money’ (usually more than the certain amount you gave). So when trading money for money I believe it’s clear that it has the obvious sign of usury (Riba):
Shaykh `Abdul-`Azeez Bin Baz:
Insuring one’s life and property is forbidden; it is not permissible due to the fact that Al-Gharar and usury are involved therein. And Allah – the Almighty the All-Powerful – has forbidden all types of dealings that involver usury and dealings in which there is Al-Gharar, as a mercy for the (muslim) community and a protection for them for what is harmful to them. Allah – Most Glorified, Most High says:
“wheras Allah has permitted trading and forbidden riba” (usury). Al-Baqarah 2:275
And it has been authentically reported from the Messenger of Allah (sallAllaahu ‘alayhi wa sallam) that he forbade selling AL-Gharar. And Allah is the granter of success.Fatawa Islamiyah, volume 5 / page 19
Permanent Committee for Research and Verdicts:
Fatawa Islamiyah, volume 5 / page 20-21
Shaykh Muhammad bin Saalih al-`Uthaymeen :
Fatawa Islamiyah, volume 5 / page 21
Insha’Allah if I come across more useful points to share I will.. but for now I gotta run for Jum’ah prayer…
Ali
Salam Alaikum Ali,
Thank you for your comment. Really…I do not intentionally try to find provocative postings (well, not most of the time…) but I never know what will catch my thoughts, then I’ll start to dwell on the topic, make some notes, start some research and viola…a post emerges!
I think this subject is another one which highlights the distinctions in culture and mindsets (not even moving into religious distinctions).
I had no idea there was controversy – even among sheiks and scholars – on this subject until watching the talk show!
Regards,
Carol
Carol,
Ali posts the most conservative rulings. Do you know who “Bin Baz” is?
Anyway, unless Ali plans to support my family after I am gone I most certainly do have life insurance. I know all too well how things go when you leave it up to others to help you out.
All too often you get little or nothing, or almost literally have to sell yourself to get the smallest bit of help. My experience with the Saudi government and other Muslim agencies and organisations are prime example of that.
Leave these people to support my children? No way. There is an old Arab saying that goes something like “trust in God, but hobble your camel anyway”.
Yes; I have heard of Bin Baz. Thanks for your comment.
its hard to say if its haram or not but i do hope that Islamic scholars and experts can come to a consensous on this matter.
Insurance is not gambling nor is it usury unless you are into the “Intellectual Acrobatics” that the ultra conservatives make to prohibit everything. If a person has children and a family to take care off, I consider it a responsibility of the person to have a safety net for them. There is nothing more Islamic than taking care of your family.
The rulings provided in the first comments sounds like answers to questions paused to clerics. That is not research nor does it provide how the conclusions of linking insurance to usury and gambling were made. These are logical leaps. Further, clerics and researches are interpreters of the text, they do not make rules those are made by Allah. The clerics are men and they can make mistakes and certainly are responsible to support their arguments and can be challenged on their rulings. We should not make their words sacred, which has been a tendency of late.
AbuSinan, I agree with you. Since, this is debated between clerics and I really do not see good evidence of prohibition. I will err on the side of taking care of my family.
Hey Carol…. interesting post, just like the recent ones. These few posts helped me a lot (since I’m new here) to get to know “who is what”, if you know what I mean.
Anyway.. the issue of insurance is not getting much attention in the kingdom, at least not as much as I had hoped, simply because people have not yet realized its importance, and they have not much needed it anyway.
Ali, thanks for sharing the information, but I think these fatwas are a bit off the subject!!!!
Abu Sinan, I’m sad to know that your “experiences with the saudi government and the other muslim organizations” proved to you that you often get “little or nothing”. But, I am interested to know more about this… care to share these experiences with us?
Nader,
If you click on my name you can pop on over to my blog. I get the feeling Carol thinks I talk about the issues too much here anyway. Suffice to say it is about marriage recognition and the way the government has treated my Mother In Law, whose husband worked as a diplomat for the Saudi government for 25 years, 40 years total.
http://abusinan-sayf.blogspot.com
Nader,
I typed a response but I think it disappeared because of the link. (Spam filter?) Click on my name or go to Carol’s blog roll. You’ll find my blog there, “Abu Sinan’s Blog”.
I think Carol has heard enough about my issues on here and other places, it deals mostly with marriage recognition from the Saudi government and the Saudi government’s treatment of my mother in law, ill widow of a Saudi diplomat.
Cheers.
I am interested to know about views on car insurance while on the “insurance” subject. I know its not required in Saudia but it is in America.
AbuS&S- Not to be nosing around in your financial affairs but from my understanding I thought you lived and worked in America. Do you not pay into social security? Wouldn’t that take care of your family if something were to happen to you?
As far as myself and my husband, the only insurance we carry is auto. We get social security statements about every 3 months and according to them if something happened to my husband I would get up to $2800.00 a month. That would cover all our bills plus food and still leave an extra $1000.00 every month, Alhumdulillah!
My husband has also told me that in the event something happened to him there would be 100s of people ( family & friends ) to make sure we were okay. I believe this because I’ve actually witnessed it in other situations. Alhumdulillah, I have no worries in this area. Insh’Allah I will never have to experience the loss of my husband.
Tina – Actually car insurance is required in Saudi Arabia, at least to get your car license and registered.
Nader – Glad you are enjoying the posts and learning.
Abu Sinan – thanks for your responses.
Carol,
Thanks for that info! So I’m assuming its halal?
Hi Tina, if you are referring to auto insurance, my understanding is it is certainly halal and a big necessity in KSA too!
@ Tina,
I guess it all depends on where you live. $2,800 would barely make an apartment payment where I live. I guess my wife could move, but we have a child with autism and he needs the schooling here. Most other places do not have special education systems that would even give him a chance.
Besides, at $2,800, that is just a few steps above the federal income poverty level. For a family of 5, which is what it would be if I were to die, the poverty level is around $25,000. Living at a poverty level isnt something I wish on my family.
SS would leave my family VERY vulnerable. Besides, if life insurance would be judged haram, wouldnt SS be so as well? It works on kind of the same system, pay in, get money when you die.
Everyone will have to deal with the loss of a spouse at one point or another, it all depends on who goes first. My experience has taught me that the only person you can trust is yourself. Family wont always be there, family friends wont be there often and you cannot count on the government.
Friends and family are often full of hot air, but when it comes to getting something done it is a different story. Besides, it isnt a good thing to be left requiring the assistance of friends and family forever.
I am sort of confused about why car insurance is required in saudi arabia, but then some scholars think that life insurance is haram. Do these same scholars also view car insurance as being haram because it may or may not deal with interest or is kind of a selective picking and choosing and they do and do not like?
Anyways, I agree with Abusinan. I would hate to leave myself or my family completely dependent on the charity of others if something terrible were to happen
*selective picking and choosing of what they do and do not like?
(sorry for the typos
Carol,
As rightly mentioned by you, there are two kinds of Insurance policies and as far as Term Insurance is concerned, there are no financial rewards that a person earns if he/she survives the insurance term. In case of death, the beneficiary gets a fixed amount as mentioned in the contract.
So, atleast as far as Term Insurance is concerned, IMHO, there is no usury involved.
Regards
Pat
couldn’t this extend to any type of insurance? Health insurance, car insurance, home owners insurance, and travelers insurance. Personally I haven’t found the arguments for it being Haram convincing enough. The position of it involving gharar isn’t all to convincing to me when it comes to life insurance, I mean we will all die it is guaranteed afterall.
Now the medical insurance in this country I can do without I absolutely hate it. They cover close to nothing and even when they do cover something they debate you about it. I’ve never had such a problem with medical insurance in the US. Rediculous!
Great post as usual, Carol!
I personally am of the oppinion that life insurance is ok, and since there is no difinitive Islamic ruling on it, save the online “sheikhs” who usually don’t know too many details about the situations that are asked about, I believe that we as Muslims are to use our brains and do what we think is best.
Alhamdulillah, my husband and I are financially healthy enough to not need life insurance here in KSA, but if we ever relocated to the USA we would have it for sure. If something happened to my husband and I lost my sole provider for my daughter and I, I would not know what to do. My family isn’t well off enough to take care of me, and although his family would be able to help, I wouldn’t want to be a burden on them.
And yes, car insurance is for sure required here in KSA…my husband spent a day in jail for not having proof of insurance while driving brother’s vehicle.
American bedu, are you Muslim?
like yourself, i too was rather perplexed when i read the headings of this entry. I am muslim and I have an endowment policy life insurance. Coming from a muslim country, I don’t think there was ever any big a debate about this that it awards newspaper coverage. Maybe in KSA things are much more stricter than it is here..
Just one last comment on this.
Insurance was very controversial in Saudi a few years back. This is why you see these old rulings. In typical Saudi style, someone with the right connections wanted to make money of the business on insuring motorists. Suddenly you see most clerics either finding ways to make it acceptable or not commenting on the topic all together. Just an example of how credible some of the fatwas are.
If you look at Saudi history you will find the same pattern in many areas like banking, loans, satellite tv, etc. When the money comes in, they will figure out a way to make it absolutely halal. They may even figure out a new model of providing insurance to give an advantage to a company that is well positioned to cash in (they did that with Islamic banking and loans before).
Great comments as always!
Anon – I prefer not to answer too personal of questions but if you do further readings on my blog you will read about experiences in Makkah and performing umrah.
Yes; it is interesting how car insurance is required and one will face penalties without it yet there is much controversy over other types of insurance. Maybe because car insurance is a ruling at a ministry level and not made by a sheik? I don’t know!
Good comparison Saudi in US by raising the issues of banking and loans. While Saudi naturally follows islamic banking and alledgedly no interest, there certainly are “service fees” to be paid which are suspiciously in the same kind of form as if one were charged interest!
I read recently, dont remember where, they did a study, although limited, that compared interest to the fees paid on “Islamic” loans. They found that the majority of Islamic loans included “fees” in place of interest, that actually EXCEDED what the cost of interest of a similar products offered in the market.
You are correct AbuSinan. It costs more to get a loan from an Islamic bank. It is a sham that guarantees banks higher returns at a lower risk. It minimizes competition between the providers. Interests are collected, but hidden behind a paper trail and creative use of words. It is nothing better than a more expensive standard loan that carries interest.
For depositors the opposite occurs. They get more risk for lower returns. Additionally, even major international banks are getting in the game lately. Which means the money can be funneled into loans that have not received the Islamic loan certification (if that means anything anyhow).
This is one heck of a topic.
What I don’t like is when people start giving their opinions in such matters. The Prophet said that when one gives his/her opinion in religion, even when it is right, s/he is wrong!
It is human nature to justify that which we like to do or have or benefit from. A smoker will state that smoking is not haram even when most scholars agreed that it is and issued fatwas in this regards. A drinker would also justify that s/he’s not hurting anyone. One who dates and engages in premarital sex will justify his acts in some manner as well and may even claim that he intends to marry this person, so what’s the big deal.
And anyone with a life insurance policy or one who works in such an industry will state his/her opinion and justify it. Unfortunately, I have family members who are living the life because of the amount of money they make from Life Insurance sales and will argue until you’re blue in the face that it is absolutely halal!!!
It is clearly haram as most scholars stated. Even Adil Salahi quotes that the insurance company must also invest its money in what is halal. So while he states it is permissible, he also states a requirement that the company must partake in halal investment. That’s like saying it’s OK to go to a bar but that one must make sure that the bar serves no intoxicants.
Anyways, I heard from such visiting scholars (to the US) from Saudi Arabia and Al Azhar in Egypt that life insurance is definitely haram. The reason is that it is buying money for or with money. “I make payments and if I die my family collects millions.” This is gambling as many have said. It is based on usury and is not permissible.
I am surprised that people also equate auto insurance with life insurance. In the U.S. it is the law of the land. According to the same visiting scholars, a Muslims must follow the law in such a case – or the option as provided by the DMV, is to deposit around $25,000 with the department of motor vehicles for “self insurance.”
And let’s not forget that auto insurance does not provide the incredible benefits as life insurance does. In a major accident, if a car is totaled, there’s a limit to what is paid and then rates skyrocket if the driver was at fault. So there’s a benefit and a penalty. In Life insurance, there’s only a reward.
Wallahu-A3lam
ATW
Thanks for the additional comments.
Abu Sinan, Saud in US: Obviously I’ll need to start on a separate post about Islamic banking and finance! (smile)
ATW: Thanks your comment and views. As I understood from the research I conducted and watching the talk show on the subject here in Saudi, sheiks and scholars remain divided on the issue of life insurance.
Perhaps people who would like to be able to provide for their families in the event of a death could take a set amount and put that money away every month rather than actually purchasing a life insurance policy.
Also just to add to my comment above, while I said that SS would more than cover our bills and my husbands family and friends would come to our aid I would never solely rely on that income nor would I expect friends and family to take care of us forever. I have worked many days in my lifetime and am not afraid of hard work or being the sole provider for my family if need be. ; )
well it just happened we had both Saudi and expat friends over today and I asked their views on this topic. Interestingly one of the Saudis cited a certain Sheik and said it was okay to acquire life insurance. Another one cited another Sheik and said it was clearly haram. There was quite a heated discussion on the issue.
I would say it again, Carol. We in Saudi Arabia are not in great need for insurance and thus we are far from being forced to understand it and know what it actually is, let alone having PROPER fatwas on the issue.
I would like to pause for a minute here and talk about what I mean by “PROPER” fatwas. Unlike Saudi in US (who I think has an amazing ability to perceive things in the most negative way) I think that fatwas are issued in a hasty manner. Yet, I totally disagree that these rulings are altered wherever there is a financial gain, and I do not think that religious scholars, whoever they are, are financially driven. What is done is this:
A new practice or product comes to the surface. Religious scholars issue hasty rulings against it. When they issue these rulings they usually know that they are hasty and that they have little understanding about the issue, yet they still choose to do so because they want to be on the safe side, religious wise. Now, once this practice has been understood and tested, a proper fatwa will be issued and alter the previous fatwas. Clear examples of that are satellite dishes, I have myself heard Friday speeches warning from what then was called “the live broadcasting” “البث المباشر” and heard many tapes on the issue. Now things have changed, since they have properly understood what satellite dishes really do, and how they could be used. Same with the internet. Actually.. I have heard two contradicting fatwas from the same scholar about internet. I don’t blame him, he was merely answering the questions he was asked. The first time a conservative guy asked him about the use of internet, especially when we know that internet has many porn sites and it can misguide all Muslims. The scholar was quick to say that it is “Haram and one of the great sins”. A few months later a very excited youth came to the same scholar and asked about the ruling on using internet, in a different phrasing. The guy said that the internet could be used as a means to spread the word of Islam without any limits and so forth. The scholar then said, it is “halal and highly encouraged, and that we should teach our children to study it and master it” Do you see my point?
Now back to the insurance issue, I work in the insurance field and I wish that we in Saudi Arabia had been more developed when it comes to insurance, but I also understand and appreciate that informal transfers are still very much exercised which forgoes the need for life insurance, at least for the vast majority of the society. As we become more globalized, however, things will change, and then we will have to look at insurance in a closer perspective. Current insurance companies in the market are not much targeting individuals, rather they direct their products to the corporate sector. The most active kinds of insurance are health insurance (since it’s obligatory for non Saudis and soon will also be obligatory for Saudis) and Auto insurance (since it’s obligatory for all drivers to have a liability insurance).
Thanks for your comments Nader. Do you think it is contradictory that auto insurance or health insurance is okay whereas many say life insurance is haram? I’m not trying to argue but just understand better. Because again, what kind of control (if any) does the individual who has taken out either the auto or health insurance policy have on how the insurance company uses the premiums received to insure that the funds are continued to be used in a halal manner? If I am understanding the issue of life insurance, a big concern and stopping point on keeping some of the sheiks from saying it is halal is the thought of how the monies are invested or the view of “buying” for a life.
Here’s a quick reply,,,
Who says auto insurance is Halal? Who says health insurance is Halal?? Some (if not most) scholars are still against it, and they are because they don’t fully understand it. I’m not saying or implying that it is halal nor haram, I am in no position to make such a ruling for others. However I do make rulings for myself, especially when it comes to issues that have not been fully understood, insurance is one of them.
You might be wondering now that if its not halal why does the government make it obligatory. Well, for the case of auto insurance, many financially-poor drivers involve in traffic accidents and don’t have the money to pay for damages. Result is, driver in jail, jails are full and expensive to operate, and the injured party is not happy, and is not financially compensated for the damages she/he had! So the government thought about this and decided that auto insurance is the solution. Many scholars opposed it and said it was haram, and some still do, but the government was determined to go on with it. Then, my fellow countrymen started abusing the insurance policies they have, simply because its haram anyway, and it’s a noble thing to do these gamblers harm and make them lose!!! How did they abuse it?? You get involved in a traffic accident and you are at fault but you don’t have auto insurance, NO Problem! Call your neighbor’s cousin who happened to have renewed his driver license two months ago and had to buy an auto insurance policy, and have him claim that he was driving the car! All of this is done with the blessings of our wonderful traffic police! So they reversed the law.. you buy liability auto insurance on the vehicle itself.. not the driver. and the registration of the vehicle cannot be renewed without insurance.
Health insurance is the same. Non Saudis who come to work in the private sector should be insured by their employers through GOSI and through an approved insurance company. GOSI is a government agency that provides coverage for occupational hazards, and the approved insurance company covers sickness and other non-occupational injuries. The reason behind making health insurance obligatory is the rising costs of health care. Soon this limit will also apply to Saudis. Our only hope is that quality of our health care facilities will be boosted after this change.
I know that this goes beyong the scope of your questions.. so its offered on a take it or leave it basis!
Nader,
“Unlike Saudi in US (who I think has an amazing ability to perceive things in the most negative way) I think that fatwas are issued in a hasty manner.”
How would a person view the type of control that happens in the country when it is done in a hasty manner. Also, you are ignoring the history of how these products come into market and benefit certain groups. Are you telling me that the Saudi market is truly competitive to the point where a person can start a new insurance company without the right connections? The statements I make are negative, but they are the truth. Time will tell, you watch over the next 5 years all the major clerics will fall inline. I have seen it at least 3 times.
So you shouldn’t take too much heed of a fatwa, as they are pronounced on the spur of the moment, and according to the momentary mood of the issuing scholar.
Saudi in US:
I don’t know any clerics and I don’t have connections, and I will prove to you that someone actually CAN start an insurance company without having to have connections. At the end we both will be happy about our country, and rich! 
They are done in a hasty manner, and that’s not good, but its real. You. however, went too far and accused them of being financially driven. I don’t believe this is right.
Regarding your other question, hmmm.. now you’re challenging me. I have always thought about starting an insurance company, since insurance is one of the most profitable industries in Saudi Arabia. So how about you give me all the money you have and we both start an insurance company. It only takes 100 million to start one!
Aafke, referring to scholars in religious issues which have been studied is a must, like asking them how to perform Hajj, or asking them about prayer or fasting issues, and, quite often, they will answer these in an objective way regardless of their mood status. But again, asking them about something new to them, is not that wise, I think!
Nader,
I do not necessarily think clerics take money. Most do not. However, I think they yield to people with powerful positions. This is why you see their positions on financial issue get moderate in a hurry when money pours in.
Hey a 100 Million is no problem if it is Tiyals
Just wait for the check and work on those contacts 
I read all the comments and it is fascinating. I think relying on ANY fatwa by a Saudi based scholar is stupidity. They are all pawns of the government anyway.
Life insurance is a necessity and since there is no Baitul Maal or whatever, common sense should rule.
Thanks for adding your comment, Haleem.
“Islam today provides a comprehensive article on the difficulties of comprehending commercial insurance in today’s world and its relation to Islam. ” this link is really……
American Bedu thank you so much for a thoughtful post, and to all your commentator’s for their insight.
I am still undecided on the matter but I do want to point out that those scholars who rule life insurance to be haraam, also rule auto insurance to be haraam, except that it is permissible in instances where auto insurance has been legislated. Since we as citizens of various countries do not have a choice in the matter, then this falls under the category of when the haraam becomes permissible through necessity.
And, one point I do want to make, I do not know of ANY insurance company in North America, that makes “halal” investments with the money invested in it. Virtually all of them invest the monies in interest-based products, or through the “speculation” of the stock-market, which I am not sure, but I believe falls under the category of Al-gharar. But Allah knows best.
May Allah SWT accept all of our intentions in this regard. wa Selaam.
Canadian muslim – thank you for your comments and welcome to my blog!
Wow.. Very interesting debate…you can say arguments…or dialogue, well it is clear to me – after reading , conversation with experts–I have found concrete result,
No, it is not necessary to buy life insurance, whether it is haraam or not. ’cause you have to deal with the situation-are these insurance money invested in prohibited business or dealing with interest! Interest is not halal.
Argument- after I die who is going to take care of my family,
Answer- Who is going to take care of my own wealth, degrees, certificates, status in my business, job, and rank in the society…….
Keep halal wealth, will take care of most necessity
Thanks for your comments American Muslim.
It is very unfortunate that our muslim scholars are so ill equiped with the modern financial system,that they have brought the muslim ummah on the junction of confusion wherein may allah protect every muslim from fitna of zionist.
Only a small topic of Insurance has created so much havoc in the islamic world that it has shown how disintegrated we the muslim are today.My brothers and sister in islam i request to each and every muslim around the world let not quarel on such confused and gimmick topics which will ruin our sense of haram and halal.Let us pray to allah give us true guidance about such topics which has divided muslim.
One side there are muslims who totally denounce insurance,the second who sees it as boon to satisfy the financial need when financial misery befall on a family or an individual.The third one major part of muslims are so much confused that they have either stop or they donot want to consult the islamic scholar in their overal life matter in specific financial subject.
This point will cause more damage to the islam,in other words we are moving away from the islamic teachings.
It’s high time now for the muslim umah, in particular for the islamic scholars to take immediate damage control steps.Instead of giving individual of particluar sect or group of scholars fatwas related to such delicate crucial topics like banking and insurance which is dividing the muslim society,Please come together as one islamic body with expert opinion base intensive research and study in modern insurance and banking and what it hold for muslims.If not devise a way out from this chaos and suggest a way out from westren banking system.
Let all muslim scholars froms financial industry and islamic scholars come to a common platform and give a comprehensive formula for insurance instead of pushing muslims towards the ignorance and chaos.
This topic really irritates me and reading through people’s comments is at best interesting. The concept of life insurance is a modern thing and no such concept existed in the past. The so called “scholars” state that insurance is haram since you are getting money for money … really?
Let me go into a side bar discussion here. If one was to take this comment to the extreme then business that do currency exchange as an example are illegal as one is taking money and returning money. In fact buying and selling gold would also be haram as gold is often viewed as a univeral currency … so once again buying gold would involve exchanging money for money. The very nature of the fact that currencies including gold change value constantly means that when I do a currency exchange I may end up getting back more or less value then what I paid in the future. According to scholars this is haram .. this position is ridiculous.
Now getting back to life insurance. If I pay a stream of money to an insurance company in the hopes of getting back more than what I paid IF I DIE can hardly be viewed as an investment. Scholars will argue that this is akin to gambling because one is gambling to receive more money than what they are paying into the policy. Only problem is the only way to win this gamble is to die … what type of gamble is that? So the debate is whether I am gambling in the hopes that someone else will benefit … ummm … that seems more like compassion and intelligence to protect those that are important and close to you..
This whole topic is incredibly annoying. Scholars will state that you can only invest in companies that do not take or give interest. EXCUSE ME but name one company that does not issue bonds or who does not have interest bearing accounts. In other words the stock market and investing is forbidden for all muslims as all companies are involved in haram oriented dealings. BALONEY. If people used their own brains to determine what makes sense and follow the basic laws in Islam we (the Muslim community) would be so further along … but unfortunately we have to sit and listen to this mumbo jumbo BS from the so called “scholars” so know no more or no less than anyone else.
@Navaid,
Welcome and thanks for sharing your opinion.
As a recent widow, I wish that there was less speculation on whether life insurance is perceived as haram or not. I am confident there are many others who are without a husband, wife or children without parents that are facing challenges. In my view, life insurance is a way to help protect and take care of loved ones who are left behind.
Life Insurance in not haram, if the life insurance co.does not earn interest on your premium. I mean the investment of insurance should be on islamic way.
Otherwise it purely islamic way to provide for orphans and widows etc.
Khalil Ahmed
Life insurance is purely islamic but life insurance company should not invest your premium to earn interest. It should be islamic way.
Asalaamu Alaykom,
This is my personal opinion and I’m simply attempting to think outside the box.
First, Allah is clear and concise in the Quran regarding the distinction of trade as being an acceptable practice whereas interest is forbidden. It was that simple. Trade has always been practiced with both parties satisfied, whereas interest was cleverly put together to exponentially satisfy one party and deprive the other. Life insurance isn’t neither trade nor interest. But can we associate life insurance more with trade or interest? It is unquestionable that the majority of people suffer from interest in which a minority gains. Would it be fair to say that everyone equally gains from trade? I believe so. Now who benefits from life insurance? The majority or minority? Is the gap tiny, small, big, enormous?
Next, what are the downfalls of trade? If both parties sought the products of the other, then there is no downfall. If one party believes that the trade is not a fair one, then he/she pulls back. There is no downfall. What are the downfalls of interest? The money has to be somewhere even though it was never earned or printed. Debt, depression, anxiety, always in a state of fear, and many, many, more downfalls. The most significant downfall of interest is the current global economy. What are the downfalls of life insurance? ONLY one party is satisfied. The other party is deceased. Evil thoughts float in the air during desperate times. With that said, many plot evil schemes taking away lives of even those they love.
Third, if i’m an agent for a life insurance company and I made 3 sales I would make $1100. So far so good. Now as long as the 3 insured continue to make their payments, I will be collecting a commission for the rest of the insured’s life. Now that isn’t fair. I would be gaining a commission without ever having to do anything to earn that commission.
Finally, language plays a big role when attempting to interpret the Quran and Hadith. Hence, it may be possible that the term commission may be associated with interest and that is where we are all confused. Sadly, the scholars of this wonderful religion (Islam) haven’t much to offer on this topic. May Allah guide those who seek his guidance and I hope this helped someone. Asalaamu Alaykom