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,

1.How about making life insurance policy in Islamic point of view?

2. How about making vehical insurance policy in Islamic point of view?

3. If Islamic banks are not available in any place can we Keep bank accounts in other banks where intrest is allowed?

(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:

Interest and banking

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 no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) 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: How about making life insurance policy in Islamic point of view?

It is not the concept of ‘insurance’ per se which is unlawful or prohibited in Islam, but it the ‘riba’ element in the prevalent conventional insurance transaction which is absolutely prohibited by Allah and His Messenger (saws) in Islam. There are several good Islamic Insurance companies which provide insurance cover on various subjects based on interest-free Shariah compliant principles, and there is absolutely no harm or restriction in Islam if if one seeks insurance cover on interest-free principles.

Because unlike other elements of time, death is an absolute certainty; thus the absolute majority of the scholars and jurists in Islam are of the opinion that one, who sincerely believes in Allah and the Last Day, cannot take out a life-insurance policy.

Q-2: How about making vehical insurance policy in Islamic point of view?

Beloved brother, we reiterate again that it is not the concept of insurance per se which is unlawful or prohibited in Islam, but it is the riba element in the prevalent conventional insurance policies which is prohibited by Allah and His Messenger (saws). If one wishes to cover one’s vehicle/s through an interest-free Shariah compliant insurance cover provided by the many Islamic Insurance companies, there is absolutely no harm in such a cover.

Q-3: If Islamic banks are not available in any place can we Keep bank accounts in other banks where intrest is allowed?

Again, it is not the concept of ‘banking’ per se which is prohibited in Islam, but it is the ‘riba’ element which is so prevalent in the interest-based conventional banking system which is categorically prohibited and declared unlawful in Islam by Allah and His Messenger (saws).

But if one cannot find or access an Islamic Bank or financial institution, there is absolutely no harm if one keeps one’s account or one’s funds in a conventional interest-based bank; but one who sincerely fears Allah and the Last Day, must abstain from taking any interest whatsoever from such transactions.

Al-Tirmidhi Hadith 2829 Narrated by Ali ibn AbuTalib

Hadrat Ali (r.a.) 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