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Please clarify the religious stand/ruling on insurance contracts for the purposes of education.

Answered according to Shafi'i Fiqh by Darul Iftaa Jordan
Please clarify the religious stand/ruling on insurance contracts for the purposes of education.

Answer:
Praise be to God; prayers and peace be upon the Prophet of Allah After studying this system, it has become clear that it is a commercial insurance contract in which the relationship is based on exchanged compensation between the insured and the insurance company directly. Commercial insurance is forbidden(Haraam) according to the majority of scholars and jurisprudence councils because the contracts are based on betting and gambling. God says (al-Ma’ida 5), “O you who have believed, indeed, intoxicants, gambling, [sacrificing on] stone alters [to other than Allah], and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful”(Qur'an 5: 90). It also includes certain articles about usurious loans where the regulation states that the "Company agrees to grant a loan on the document … and the company has the right to redefine the interest rate on existing and new loans." Based on this, it is forbidden to buy such insurance until the regulations are switched into Islamic cooperative insurance. And God knows.

This answer was collected from the official government Iftaa Department of Jordan.

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