Would it be permissible to take out a legal cover plan that cost R33 monthly but covers legal cost of up to R40 000 a year and includes id fraud cover of up to R25 000 a year?
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The legal cover plan, similar to other types of insurance, is not permissible. These types of transactions contain elements of riba (usury), gharar (uncertainty), and qimar (gambling) which are all corruptive factors in Shar’i transactions. The element of riba takes place when the company pays the client an amount greater than the amount of the premium paid by the client. The element of gharar takes place because it is uncertain whether the client will ever receive any form of compensation for his payment. If certain conditions set out in the policy are not met, the client will have lost all of his money and not receive any form of exchange for his payments. The element of qimar takes place because the payout of the policy will only take place if a contingency or an unforeseen event takes place which has been conditioned in the contract. This is similar to lotteries and other forms of gambling where the payout will only take place if certain unforeseen conditions are met, such as drawing the exact numbers of a lottery ticket.
And Allāh knows best.
Muftī Yusuf Ibn Yaqub
Washington, DC (USA)
Concurred by:
Muftī Abrar Mirza
Chicago, IL (USA)
Under the Supervision of Muftī Ebrahim Desai (South Africa)
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