Social. Political. Economic. Career| Seyed Ibrahim

Serious issues & ideas. Trusted Sources.

Factors Affecting Permissibility of Insurance

with one comment

This is in continuation of an earlier blog mail titled Knowledge of Finance and Fatwas

Disclaimer: I am not an insurance broker, nor do i have anyone in my family selling it.

Most of today’s financial services (Stock market, Insurance, etc) are complex topics. One needs to spend considerable effort to understand them.  Insurance (in its various forms) is a complex subject, and an ever changing one. Many of us are confused as to whether it is acceptable or not. When we turn to Islamic Scholars (Muftis) for an answer, not many of them really understand the complexities/forms involved. But still some issue Fatwaas / religious edicts approving or disapproving these.

One scholar said “Medical insurance is Halaal, because there’s no interest in it”. Interest is not the only factor in determining if a business transaction (including Insurance) is Halaal or Haraam. On the other side are some scholars who say all insurances are Haraam, because it is a form of Gambling. I’m not sure if they really understood the differences between gambling and Insurance. I have no intention to defame the Scholars, or suggest that we can do the research and come to our own conclusion.

My point: We should explain the nuances of insurance to Scholars, and then ask them “What does Islam say about this?”

I don’t believe there will be a consensus opinion on this topic. But, i think scholars should come to conclusions after considering all options. This is an attempt to find out the various aspects / factors that should be taken into account.

The following are some conclusions and decisions from The Fiqh Council of North America (FCNA).

1. The question of insurance is an ijtihadi question. It is not a mansus (textual) one. The scholarly responses are expected to be variant.

2. The practices of insurance and the laws regulating them in North America have changed significantly from what they were initially and even a decade or two ago. They allow for a more equitable to prevent deception and indeterminacy.

3. The modern life insurance contract and other types of insurance contracts are actually new forms of contracts that did not exist in earlier times. There is no full and direct “qiyas” with any of the transactions known in our fiqhi legacy as “al-‘uqud al-mussammah”.

4. This type of contract is a hybrid of ta’awun (mutuality) and istithmar (investment), both of which are islamically sound transactions.

Here is a spreadsheet that has the arguments for (supporting) and against Insurance, and some comments. It also has some links to Fatwas & Scholars. It has been published on the web at

Note that there’s no text of fatwa here – only the factors that have an impact on deciding if Insurance as a whole, or certain types of Insurance is Halaal or Haraam or something in-between.

Action Items:

1) Take a print out of this file ( from the link), read it, take it to a Scholar, explain the arguments for and against, and ask for a Fatwa

2) Let me know if there are any other factors that should be considered while deciding the permissibility of Insurance

3) Please DO let me know the discussions, if you had talked to a scholar.

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Written by S Ibrahim

Apr 3, 2009 at 12:10 pm

One Response

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  1. Salaam

    I have studied several Ayatullah’s fatwa on life insurance and they all say it is halal.

    With best regards


    May 3, 2009 at 7:27 am

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