Q. Is it permissible in Islam to be part of a Medical/Dental Insurance scheme whereby the employees all contribute a sum monthly? In the event of a person becoming ill and lands up in a private nursing home for treatment, the insurance company pays the majority of the cost.
A. No, it will not be allowed for you to be a part of the Medical/Dental Insurance scheme which you have asked about.
From an Islamic perspective, Insurance has an element of interest and/or qimar (gambling) in it, both of which are not allowed in the Shariah. In this Medical/Dental Scheme, it is possible that you make your contribution for years, and have even resigned from the company without making a claim for medical or Dental care. In this case, you lose all the monies which you have contributed. On the other hand, the Insurance Company may be required to pay a certain amount for your medical care which may be far above the amount which you have contributed. In this case, it will be unlawful in the Shariah for you to make a claim of an amount which you did not pay, invested or you are not the owner of.
So, from this, it shows that on one hand you may stand to lose part of, or all the contribution you have made. In this case, it will be qimar (gambling) which is haram, or you may receive much more than what you paid. In this case, it will be interest which is also haram.
Hence, owing to these elements (of qimar and interest) which are unlawful in Islam, it will not be permissible for you to take part in the Medical/Dental Insurance Scheme.
It should be noted that some scholars have given an allowance for commercial and house insurance due to the severe losses that can occur when there is no security. For example, in riots which occur in other countries, houses and businesses are burnt down, and there is no compensation from the Government. Similarly, on account of the negligence of a shipping company, a person may lose an entire container (coming from another county) which is worth millions of dollars, and there is no compensation for this loss. As such, as a last resort, when there is no other alternative of securing these things, some scholars have allowed, based on a dire need, commercial and house insurance.
And Allah knows best.
Mufti Waseem Khan