Life Insurance in Saudi Arabia – Is it Haram?

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.

Islam online provides a detailed explanation but does not definitively say whether it is haram or allowable.

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.

Islam today provides a comprehensive article on the difficulties of comprehending commercial insurance in today’s world and its relation to Islam.

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?


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