Legal Plans

Are legal plans permissible?

In the name of Allah, the most Beneficent, the most Merciful.

Answer

From an Islamic point of view a legal plan in essence is like an insurance in which the customer pays “x” amount of money monthly in return for the services such as advice, dispute etc… from the company. If the customer does not require any legal assistance then the premiums paid will be lost. This arrangement is similar to insurance, hence, impermissible.

Briefly, insurances are impermissible for three reasons:

  1. Interest/ Usury
  2. There is an element of deception
  3. Qimar (gambling)

The reason for it being interest is that insurance is the sale of money for money of a greater or lesser amount with a delay in one of the payments. Insurance companies take people’s money and promises to pay them more or less when an accident happens. This is riba, which is haram in Islam.

(Hujjatullahi Baaligah p.98 v.2)

In the Holy Quran Allah (SWA) has said:

“Allah has permitted transactions and has forbidden riba” (Surah Al Baqarah v.275)

The Prophet of Allah (Sallallahu Alahi Wasalam) has cursed the person who takes interest, who gives interest and who writes it and who witnesses it.”

(Mishkaatul-Masabeeh p.244 v.1)

“To take dirham of interest knowingly is worse than committing adultery 36 times.” (Mishkaatul-Masabeeh p.246 v.1)

Also in insurance policies there is an element of deception, which Islamicaly, is termed as garar.

  1. The amount to be paid is unknown
  2. The time it will occur is also unknown.

The Prophet of Allah (Sallallahu Alahi Wasalam) has forbidden deception and uncertainty in transactions. (Sunan Tirmizi p.233 v.1)

All forms of insurances are based on uncertainty. The reason why you are being insured must have a possibility of happening or not happening. For example, when an accident happens and the extent of the damage caused.

Finally, the third reason for it being impermissible is because there is an element of qimar (chancing). Insurance policies require payment of money, thereafter if the following mishaps were to occur, a payment will be made. This is pure gambling, thus forbidden in Islam.

The definition of Gambling as stated in Raddul Muhtar;

“Gambling is a dealing in which there is a chance of gain and loss. (Raddul Muhtar P577 V.9

Only Allah Knows Best

Mohammed Tosir Miah

Darul Ifta Birmingham.

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