I am working in an Oil company. Our company offers loan for house building and purchase of plots for those regular employees who have completed 10 years service period. The loan is offered up to 55 equivalent basic pays and we have to return back it to company in 120 installments i.e. in ten years. As per the company policy, all the loans offered to employees are under insurance cover i.e. in case of death of that employee, the insurance company will pay the remaining amount of loan to our company. This loan is interest free by the company i.e. we will return the same amount to company which we have borrowed. But insurance premium has to be paid by us i.e. borrower. Kindly guide us, whether we may avail this offer of the company or not. Please reply for any other information required.
بسم الله الرحمن الرحيم
(Fatwa: 883/559/L=1434)
If the company gives you interest free loan then it is lawful to take loan in this way. However, it seems by the question that it is necessary to avail life insurance in order to get loan from the company. If the case is so then it is not lawful to get insurance in order to receive the loan. Insurance is based on interest and gambling and both the things are haram as per the holy Quran. And it is also not lawful to go through haram practice for lawful purpose as well. However, if the company gives you loan by taking something as security then it may be followed.
Allah knows Best!
Darul Ifta,
Darul Uloom Deoband