Life Insurance money
In the name of Allah, the most Beneficent, the most Merciful.
Answer
With regards to life insurance, the correct view is that it is haraam in Islam. There are three reasons for the impermissibility of this:
- Interest
The Holy Prophet of Allah Sallallahu Alahi Wasalam has said, “To take one dirham of interest knowingly is worse than committing adultery 36 times.” (Mishkaatul-Masaabeeh p.246 v.1)
- There is an element of deception. The insurance contract contains uncertainty due to the amount being paid is not fixed and the time it will occur also being uncertain.
The Prophet of Allah Sallallahu Alahi Wasalam has “forbade deception and uncertainty in transactions.” (Sunan Tirmizi p.233 v.1)
- Gambling
Insurance policies require payment of money, thereafter if the following mishaps were to occur a payment would be made. This is a pure form of gambling. (Raddul Muhtar p.577 v.9)
Therefore the lump sum one has received as life insurance should not be included in the distributing of the deceased’s wealth. However the money you gave in instalments every month is considered halal, hence, it is lawful to use that amount. The haraam insurance money should be given to the poor without the intention of reward. (See Raddul Muhtar p.553 v.9).
Only Allah Knows Best
Mohammed Tosir Miah
Darul Ifta Birmingham
