Assalamualaikum, my parents bought for me 2 different insurance policies for me a couple of years back. One of the policy is that I have to pay premiums for 10 years and I’ll be covered for death and terminal illness until the policy matures which is around 50-60 years laters. The other policy is an investment link policy, which I have to pay untill the policy matures and part of the premiums will be used as investment in funds and I’ll still be covered for death until the policy matures. My parents will be retiring soon and I’m planning to take over on paying the premiums of my policies, but I’m quite doubtful if these policies of mine are permissible in Islam.
Then I recently came across an article of the late Prof. Mustafa Al-Zarqa which states “If the insurance company invests in what Islam forbids, then taking out its policies becomes forbidden as a result.”
But I’m not sure if my insurance company invest the money according to the Shari’ah.
Please advise me on what to do. Jazak’Allah khayr
Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,
All forms of voluntary insurance, be it life insurance or short term insurances are not permissible in Islam. The reason is that there are two Haraam elements involved in insurance schemes; one being interest and the other is gambling. The interest aspect comes to the fore when, after paying a minimal amount of premiums, a substantially greater amount is received to cover one’s losses. This access amount paid is money in exchange of the money (premiums) paid every month. If you die, the payout will be more then the amount paid over the 10 years.
The gambling is that insurance is like a game of chance: If one gets a terminal from the insurance company that would be far in excess of the premiums paid in. If on the other hand, you do not get any such illness, you would not get that benefit.
We should forget about getting involved in such prohibited forms of insurance and we should rather place our trust in Allah Ta’aala. We should have the firm conviction that only He will protect our health and assets and sort out our financial commitments. A Mu’min should place his assets in the protection and trust of Allah Ta’aala and not look towards infrastructures established by the Kuffaar whose only purpose is to deplete the hard-earned money of the unsuspecting masses and to make the poor poorer and the rich richer.
And Allaah Ta’aala knows best
Ismail Moosa (Mufti)
This answer was collected from Fatwaa.com which is an excellent Q&A site managed by Mufti Ismail Moosa from South Africa. .