Fatwa ID: 05372
Answered by: Mufti Mujahid Hussain
If anyone takes an insurance policy and at the end of the term if he gets an extra amount than paid to a company then:
In the name of Allah, the Most Beneficent, the Most Merciful.
As for the first part of your question, yes it would be called interest. However one must bear the following in mind:
- If the claim is linked to a third party and a person is claiming from the third party’s insurance company what is rightful due, that would permissible and the extra amount will not be deemed interest.
- If a person has been insured with the same company for more than a year, he or she should calculate the amount paid to the company from the first year. For example, Zaid has been insured for five years. He has paid £1000 a year for his insurance policy. After the fifth year, he makes a successful claim of £3000. As he has paid £5000 in total, he is fully entitled to the £3000.
- If a person is certain he will take out further insurance policies from the same company in the following year or years to come, he may keep hold of the extra amount with him and use it as payment for future policies. For example, if Bakr has been with an insurance provider for two years, paying £1000 a year. Then he receives £3000 from the insurance provider. Now if he is certain that he will take out an insurance policy from the same company next year, he may save the amount and use it as payment for the following year. If he decides not to take out insurance with the same company then he may donate the money to charity.
As for the second part of your question, No, it is not recommended to use the amount for the construction of a Masjid. The reason for this is Allah (s.w.t) tells us in the Holy Quran that a masjid should be built upon piety. Using pure Halal money for the construction of a Masjid is part of building a Masjid upon piety.
Allah (s.w.t) says
لَمَسْجِدٌ أُسِّسَ عَلَى التَّقْوَىٰ مِنْ أَوَّلِ يَوْمٍ أَحَقُّ أَنْ تَقُومَ فِيهِ
Verily, the mosque whose foundation was laid from the first day on piety is more worthy that you stand therein (to pray)[Surat At-Tawbah 108]
Only Allah knows best.
Written by Mufti Mujahid Hussain
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham