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Pension Plans and Education Funds

Answered according to Hanafi Fiqh by DarulUloomTT.net

QUESTION:

Dear Mufti,

Can you say if pension plans that are interest free and accident and emergency medical plans together with education plans for children to go uwi is permissible from Guardian life?

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ANSWER:

As Salaam Alaikum,

Pension plans that are interest free is permissible.

The accident and emergency medical plan is really an ‘Accident Insurance’ offered by Guardian life. This operates like other form of insurances where Gharar (uncertainty) is found. Hence, it will not be permissible.

Education plans for children is another product of Guardian life which encourages one to put aside/save or contribute towards a child’s future education. This on its own is good when it is connected to simply saving monies for the future education of one’s child. However, in many cases an ‘Education plan’ is combined with an insurance. The purpose of being combined with an insurance is that if something happens to the parent or if he/she becomes disable or passes away, then the child will still receive the predetermined payout amount when the plan matures. The Insurance ensures that the child’s education will continue if the savings portion is not sufficient to pay out the child’s education. Therefore if the ‘Education plan’ is combined with savings and insurance, then it will not be permissible due to the unlawful elements present in Insurance. If a person has taken out such a plan, then it will be permissible for him to benefit from the savings portion which was contributed to the fund.

If the ‘Education plan’ deals only with the savings of a person which he contributes on a monthly basis and builds up a fixed fund over several years, then this is permissible.

And Allah Knows best

Mufti Waseem Khan

30/11/2017

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