Insurance

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,

 

I would like to know being a muslim can we purchase PENSION POLICIES, someone offering it to me, by reading it looks very nice to help ourself at our old age. I'll copy the procedures of policy below to make you understand the procedure of policy, it might be helpful for you in answering my question. also i would like to know can we purchase INSURANCE POLICY for us or not.

 

But i would like to get the answer as soon as possible. because may be last time also i asked something but nothing till now., anyway please try to send the answer of this question ASAP.

 

Policy is like this:-

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Unit Plus III Pension Features.

It is a PURE PENSION POLICY ( NO Insurance Cover)

# Premium : Minimum Rs 24000/ per anum Max: No Limit ( You can pay any higher amount)

# Age to enter into Policy: Min 18 Years, Max: 67 Years

# Pension Age: Min 40 Yeras Max: 75 Yeras

Pension Period: From the Pension age to Life Long

(Nominee Pension: After the proposal death Nominee will be given same pension till her 100 yeras. After the Nominee , Fund value will be given to legal hierer)

 

How much pension?

It is depended on How much premium you pay per year. Example: A person at 35 yeras of age is paying Rs. 72000/- Per year for 10 years ( It means upto 45 years of his age) and wish to take pension from 58 Yeras of retired life, he will be getting Rs. 36000/- per month pension for life long.

(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:

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.

The concept of ‘pension/insurance policies’ per say in its essence is not prohibited in Islam; it is the ‘riba’ or interest element in these policies if any, is what has been declared haraam and absolutely prohibited in Islam.

To determine whether this particular ‘pension policy’ is lawful or unlawful in Shariah, you would need to first and foremost determine what exactly would the company who is offering this policy do with the funds which you ‘invest’ with them.

If the company you are entrusting your funds with invests in a lawful company and assesses you a share according to your level of participation, in the profits/loss of the company…..more than likely such a transaction would be in compliance with Shariah Law.

But if the company takes your funds and puts all or a part of it on ‘interest’ or riba, and gives you fixed income regardless at a later date….such a transaction would not be in compliance with Shariah Law and thus absolutely unlawful.

From what you have quoted as the basic terms of the ‘pension policy’, brother, there remains little doubt that the company intends to give you a fixed income by ‘investing’ your funds in the unlawful element of interest…..and any financial transaction which is tainted with interest or ‘riba’ would be considered unlawful in the Sight of Shariah Law.

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 further 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)!

Allah Says in the Holy Quran Chapter 3 Surah Ale-Imraan verses 130-132:

130 O ye who believe! Devour not ‘riba’ doubled and multiplied; but fear Allah; that ye may (really) prosper.

131 Fear the Fire which is prepared for those who reject faith.

132 And obey Allah and the Messenger; that ye may obtain mercy.

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.

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