Annuity and Credit Unions.

Answered according to Hanafi Fiqh by

Q. Are annuity and credit unions eg. TECU allowed in Islam and where are some of the places that are halaal that a muslim can put his money. Also life insurance, is it allowed? Also is it permissible to take loans from the bank or credit unions?

A. The issue of annuity is that a person has no knowledge of where his monies may be invested to bring a return. Instead, one is told of a fixed rate of return on his contribution which is in reality, interest and hence, it is unlawful in Islam. So placing one’s money in an annuity plan would not be permissible for this reason.

Transactions with these credit unions like TECU etc. are also interest based. Whether they are savings, investments or loan transactions, they are all connected to interest. As such, transactions with Credit Unions would not be permissible.

In both the above cases, if you have placed money in order to benefit from these facilities, then it will be allowed for you to claim your capital sum. The addition which is given as interest will not be permissible for you. Life insurance is not permissible since it is also based on interest.

Taking loans from banks and Credit Unions involves the paying of interest which is totally haram (unlawful). Hence, it would not be permissible.

For security purposes, you can keep your money in a bank, but you must not do so in order to receive interest.

For investment purpose, you can invest with private companies that deal in halal products. The returns on your investment will be halal for you.

And Allah knows best.

Mufti Waseem Khan

This answer was collected from, which is operated under the supervision of Mufti Waseem Khan from Darul Uloom Trinidad and Tobago.

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