Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Assalamualaikum Burhan,

I have Two Questions.

1) Making a Life Insurance Policy is this allowed for a Muslim?

2) A Muslim Working as a Life Insurance Company agent is this allowed in ISLAM?

Please answer me quoting references from Holy Qur'an and sahi Hadeeth.

Jazakallaah

Brother

Mohammed Asif

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Life insurance

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Q-1: Making a Life Insurance Policy is this allowed for a Muslim?

Beloved brother in Islam, it is not the concept of insurance per se which is illegal or prohibited in Islam, but rather what is ‘haraam’ and forbidden in Islam is the ‘interest-based’ aspect which is utilized by the conventional insurance companies during their transactions when conducting the insurance business.

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 278:

O Believers!, fear Allah and give up that ‘riba’ which is still due to you, if you are true believers. But if you do not do so, then you are warned of the declaration of war against you by Allah and His Messenger!

Allah says in the Holy Quran Chapter 4 Surah Nisa verse 161:

That they took ‘riba’, although they were forbidden. And that they devoured men’s substance wrongfully. We have prepared for those among them who reject faith a grievous punishment (of Hell Fire)!

Al-Tirmidhi Hadith 2829 Narrated by Ali ibn AbuTalib

Ali said he heard Allah's Messenger (saws) invoke the curse of Allah on those who took usury, those who paid it, those who recorded it, and those who refused to give sadaqah.

Almost all the conventional insurance companies transact their business based on interest, and it is this interest aspect which is deemed absolutely haraam in Islam. But Alhamdolillah, today there are several Islamic Insurance Institutions which provide insurance cover on various aspects based on Shariah principles, and there is absolutely no harm in seeking insurance from such ‘interest-free’ institutions.

The absolute majority of the scholars are of the opinion that ‘life-insurance’ is impermissible in Islam because unlike other calamities and eventualities which may or may not effect man, death is one thing that is Decreed for every son of Adam by their Lord and Creator, Allah Subhanah.

The scholars and jurists in Islam are of the opinion that non-life insurance policies are permissible, provided one transacts and documents such policies which honor the principles of Shariah, and do not involve ‘interest’.

Q-2: A Muslim Working as a Life Insurance Company agent is this allowed in ISLAM?

Even if one who believes does not take out an insurance policy based on interest for himself, but works in a conventional interest-based Insurance Company, or works as an agent in a Life Insurance Company…..because he is an accomplice in transacting a contract or policy of something which is declared ‘haraam’ by Allah and His Messenger (saws), he will, without an iota of a doubt, bear a portion of the sin.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan