Rulings for Shari’a-based Life Insurance
Assalamu’alaikum, ustadz, may Allah blesses you..
What is the rulings for shari’a-based life insurance in Islam?
The conventional insurance system, with all of its kinds; life insurance, goods insurance, etc, is unlawful because it contains things that are forbidden in shari’a, such as gharar (trickery), usury, devouring other people’s right wrongly, etc.
As for the insurance that is based on the principle of helping each other (ta’min ta’awuny), in which some people collected their money and if one of them was afflicted with trouble, then the money was used to help him, such system is allowed because it is purely cooperation in goodness and aiming to help the needy, not to obtain profit from the money that they collected. (See: Fatwas of Al-Lajnah Ad-Daimah 15/266 )
Regarding The shari’a-based life insurance that runs in Indonesia, there are some of the insurance companies that attempt to return the money of their clients if, after certain period, there are no accidents happened, but it still can’t be free of the elements of trickery, gambling, and usury (that is, if they returned an equal or even more than amount that their clients have paid before). Likewise, most often, the intention of the clients were not to give donation as in ta’min ta’awuni, but to gain some profits.
And Allah knows best.
Ustadz Abdullah Roy, MA