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Is life insurance is Halal or Haram? I am told by the insurance agent that insuracne is something about pallning and such planning is JAIZ is islam.

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Is life insurance is Halal or Haram? I am told by the insurance agent that insuracne is something about pallning and such planning is JAIZ is islam.

The same planning is also refered in Quran in Surah Yousuf when he plan his food for next 7 years.

Answer

In the name of Allāh, Most Gracious, Most Merciful


Assalāmu ῾alaykum wa Rahmatullāhi Wabarakātuh

 

In principle, all forms of insurance, be it life insurance or short term insurance of motor vehicles, properties, businesses, houses or other assets are not permissible in Islam due to the fact that there exists two unlawful aspects which are directly complicated in all insurance schemes. The first being interest and the second being gambling. When a person pays his monthly premiums, if in the case of any loss a far greater amount is received to cover one’s losses. This is where the aspect of interest falls in. As far as gambling is concerned, one will never know when a loss is going to be afflicted; therefore, it is a game of chance. Similarly, here also in the case of a loss, one will receive benefits that are far greater in excess than the premiums paid in.

It is for these reasons Shari’ah does not permit any nature of insurance. The rulings of Shari’ah have been clearly mentioned in the books of jurisprudence. A person cannot deduce fiq’hi rulings by merely looking into the Qur’an and Hadīth. In order for this to be done, one should be an expert in this field and have full knowledge of the different principles outlaid by our pre-decessors. Let us analyse the core principles surrounding Qiyās (analogical deduction).

Definition: Qiyās means to convert an original (asal) ruling i.e. something which appears in the Qur’ān and Hadīth into a subsidiary (fur’u) ruling, based on a common factor between the asal and far’a.

From the above it has been established that there are four fundamentals of Qiyās:

  1. Asal– The ruling mentioned in the Qur’ān or Hadīth.
  2. Far’a– The ruling of that thing which is not found in the Qurān or Hadīth.
  3. Illat– The causative factor or the reason, which in the opinion of the Mujtahid is the case for the asal ruling and which is found in the far’a.
  4. The ruling applicable to the asal, and is now being applied to the far’a.

Furthermore, there are certain conditions when and how Qiyās should be made:

  1. Qiyās should not contradict Qurān and Hadīth.
  2. Qiyās can be conducted only when there is no clear ruling in the Qur’ān and Hadīth.
  3. One needs to be qualified to make Qiyās. A person must be a proficient Aalim of Deen and have the attributes of a Mujtahid.
  4. A condition for an Illat is that it is considered and recognised in Shari’ah before it can be applied.                                                                                            

For a brief understanding of the verse in Surah Yusuf, it is important to know the reason for the revelation of this verse and what was the causative factor behind it.

يُوسُفُ أَيُّهَا الصِّدِّيقُ أَفْتِنَا فِي سَبْعِ بَقَرَاتٍ سِمَانٍ يَأْكُلُهُنَّ سَبْعٌ عِجَافٌ وَسَبْعِ سُنْبُلَاتٍ خُضْرٍ وَأُخَرَ يَابِسَاتٍ لَعَلِّي أَرْجِعُ إِلَى النَّاسِ لَعَلَّهُمْ يَعْلَمُونَ (46) قَالَ تَزْرَعُونَ سَبْعَ سِنِينَ دَأَبًا فَمَا حَصَدْتُمْ فَذَرُوهُ فِي سُنْبُلِهِ إِلَّا قَلِيلًا مِمَّا تَأْكُلُونَ (47) ثُمَّ يَأْتِي مِنْ بَعْدِ ذَلِكَ سَبْعٌ شِدَادٌ يَأْكُلْنَ مَا قَدَّمْتُمْ لَهُنَّ إِلَّا قَلِيلًا مِمَّا تُحْصِنُونَ (48) ثُمَّ يَأْتِي مِنْ بَعْدِ ذَلِكَ عَامٌ فِيهِ يُغَاثُ النَّاسُ وَفِيهِ يَعْصِرُونَ (49)

46. “O Yusuf! O most truthful! Inform us regarding seven fat cows being eaten by seven lean cows and seven green ears of corn and others that are dry, so that I may return to the people that they be enlightened.”47. He replied, “You will farm for seven consecutive years. Leave whatever crops you harvest in their ears, except what you require for eating.”48. “Thereafter seven difficult years will follow that will consume all you would have stored for them except the little that you leave.”49. “Thereafter a year will follow in which abundant rains will fall for the people and they will distil juices.”

The interpretation of the dream was that people will harvest crops for seven consecutive years, as represented by the seven fat cows and the seven green ears of corn. Thereafter, seven years of drought would follow. When all their reserved stores of grain would be depleted. This was indicated by the seven lean cows eating the seven fat ones, and by the dry ears of corn.

Together with the interpretation, Hadhrat Yusuf (Alayhis Salām) also advised them concerning the measures they should take to prevent starvation. He told them that they should consume only what was necessary in the first seven years and He also advised them that the rest of the crops should be preserved in their ears so that they are not eaten by vermin.       

He also advised, “Thereafter a year will follow in which abundant rains will fall for the people and (because of the abundance of crops) they will distil juices (from the various fruits).” The extraction of juices refers to the distilling of wine as well as the extraction of oil from various crops like olives and sesame seeds.

Table of difference between storing crops of Yusuf (Alayhis Salām) and Insurance.

 

  1. Allah Ta’ala had bestowed Hadhrat Yusuf (Alayhis Salām) with the ability of interpreting the dream of the king. Furthermore, this interpretation was revealed as an āyat in the Holy Qur’an. As a prophet, He was fulfilling his duty of informing the king to harvest the crops and store away for the future as it was certain that a drought was going to afflict them.
  1. Conventional Insurance does not have the benefit of perfect/absolute prediction of the future. It is an absolute chance.
  1. Remember, this was their own crops which were going to be eaten by them and they were not going to receive any extra benefit by storing it away for the future. The king had practiced on the advice of      Hadhrat Yusuf (Alayhis Salām) as this was to the best interest of the people.

 

 

 

 

 

  1. On the contrary is the matter of insurance where one places an amount in the care of an insurance company, out of the fear that one day He/She would be in need of that amount when afflicted with a calamity, which is unknown. This is based on a future uncertain event and finally when one is afflicted with a calamity, then the insurance company pays out a large amount of wealth to the beneficiaries, which is interest and from other peoples resources.

 

 

Allah Ta’ala mentions in the Holy Qurān

الذين يأكلون الربا لا يقومون إلا كما يقوم الذي يتخبطه الشيطان من المس ذلك بأنهم قالوا إنما البيع مثل الربا وأحل الله البيع وحرم الربا.

Those who take ribā (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: “Sale is but like ribā”, while Allah has permitted sale, and prohibited ribā. (Verse: 2:275)

يا أيها الذين آمنوا اتقوا الله وذروا ما بقي من الربا إن كنتم مؤمنين. فإن لم تفعلوا فأذنوا بحرب من الله ورسوله وإن تبتم فلكم رءوس أموالكم لا تظلمون ولا تظلمون.

O you who believe, fear Allah and give up what still remains of ribā, if you are believers. However, if you do not (give it up), then listen to the declaration of war from Allah and His Messenger. However, If you repent, yours is your principal. Neither wrong, nor be wronged. (Verse: 2:278,279)

 

(Al Usūl Al Shāshī, Pg.83, Deoband)

 

And Allāh Ta῾āla Knows Best
Wassalāmu ῾alaykum 

 

Ml. Ebrahim Desai,
Student Dārul Iftā

Checked and Approved by:
Mufti Ebrahim Desai
Dārul Iftā, Madrasah In῾āmiyyah

 

 

 

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