Darul Iftaa Mahmudiyyah

Term life insurance

· 20 Muharram 1441 AH2 min readFatwa 43274English

Question

A person asked me if this type of life insurance is allowed in Islam.

America offers a type of life insurance called term life with a cash back option. It offers life insurance throughout the term but at the end of the 15-30 year term all the money paid in premiums is returned.

If it is not allowed, can you please explain why so I can provide an explanation to this person.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. [i]

This type of life insurance is not permissible. Three reasons have been cited:

1. Qimaar (gambling): The Life Insurance Company might receive more than the insured monies or might not receive any amount of money. This is the same as gambling. If the insured person is afflicted with any loss or damage to insured properties worth millions, he might receive more than what he has paid for or might receive less. This is exactly how gambling works.[ii]

2. Riba (Interest): If the Insurance Company receives premiums worth more than the insured amount, then that will be usury and interest. If there is any loss to the insured person’s property and the loss is worth much lesser than the total premiums that he has paid to the insurance company, such a person would be guilty of undertaking a usurious and interest-based transaction. [iii]

3. Gharar (Future Uncertainty): There is no certainty when the insured person will die. Therefore, the insurance contract is based on an uncertain future event, i.e. death of the insured person. Rasullullah (Sallallahu Alayhi Sallam) prohibited any transaction which has the element of Gharar.[iv]

And Allah Ta’āla Knows Best

Mahmood Suliman

Student Darul Iftaa
Gaborone, Botswana

Checked and Approved by,
Mufti Ebrahim Desai.

References (Arabic / Urdu sources)

[i] https://www.investopedia.com/terms/t/termlife.asp

https://en.wikipedia.org/wiki/Term_life_insurance

[ii] سورة الماءدة

يَا أَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنْصَابُ وَالْأَزْلَامُ رِجْسٌ مِنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ (90)

مسند أحمد ط الرسالة (11/ 105)

عَنْ عَبْدِ اللهِ بْنِ عَمْرٍو، قَالَ: قَالَ رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ: " إِنَّ اللهَ حَرَّمَ عَلَى أُمَّتِي الْخَمْرَ وَالْمَيْسِرَ وَالْمِزْرَ وَالْكُوبَةَ وَالْقِنِّينَ وَزَادَنِي صَلَاةَ الْوَتْرِ " (1) قَالَ يَزِيدُ: " الْقِنِّينُ: الْبَرَابِطُ "

أحكام القرآن للجصاص ط العلمية (1/ 398)

وَلَا خِلَافَ بَيْنَ أَهْلِ الْعِلْمِ فِي تَحْرِيمِ الْقِمَارِ وَأَنَّ الْمُخَاطَرَةَ مِنْ الْقِمَارِ; قَالَ ابْن عَبَّاسٍ: إنَّ الْمُخَاطَرَةَ قِمَارٌ وَإِنَّ أَهْلَ الْجَاهِلِيَّةِ كَانُوا يُخَاطِرُونَ عَلَى الْمَالِ، وَالزَّوْجَةِ، وَقَدْ كَانَ ذَلِكَ مُبَاحًا إلَى أَنْ وَرَدَ تَحْرِيمُهُ

أحكام القرآن للجصاص ط العلمية (1/ 398)

وَلَا خِلَافَ بَيْنَ أَهْلِ الْعِلْمِ فِي تَحْرِيمِ الْقِمَارِ

[iii] صحيح مسلم (3/ 1218)

حَدَّثَنَا عُثْمَانُ بْنُ أَبِي شَيْبَةَ، وَإِسْحَاقُ بْنُ إِبْرَاهِيمَ، وَاللَّفْظُ لِعُثْمَانَ، قَالَ إِسْحَاقُ: أَخْبَرَنَا، وَقَالَ عُثْمَانُ: حَدَّثَنَا جَرِيرٌ، عَنْ مُغِيرَةَ، قَالَ: سَأَلَ شِبَاكٌ إِبْرَاهِيمَ، فَحَدَّثَنَا عَنْ عَلْقَمَةَ، عَنْ عَبْدِ اللهِ، قَالَ: «لَعَنَ رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ آكِلَ الرِّبَا وَمُؤْكِلَهُ»، قَالَ: قُلْتُ: وَكَاتِبَهُ، وَشَاهِدَيْهِ؟ قَالَ: «إِنَّمَا نُحَدِّثُ بِمَا سَمِعْنَا»

[iv] مسند أحمد ط الرسالة (9/ 122)

حَدَّثَنَا خَلَفُ بْنُ الْوَلِيدِ، حَدَّثَنَا أَبُو مَعْشَرٍ، عَنْ نَافِعٍ، عَنِ ابْنِ عُمَرَ قَالَ: مَرَّ رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ بِطَعَامٍ وَقَدْ حَسَّنَهُ صَاحِبُهُ، فَأَدْخَلَ يَدَهُ فِيهِ، فَإِذَا طَعَامٌ رَدِيءٌ فَقَالَ: " بِعْ هَذَا عَلَى حِدَةٍ، وَهَذَا عَلَى حِدَةٍ، فَمَنْ غَشَّنَا فَلَيْسَ مِنَّا "

كتاب النوازل 479

جواهر الفقه

Answered by
Mahmood Suliman
Checked & approved by
Mufti Ebrahim Desai
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Source: Darul Iftaa Mahmudiyyah — https://askimam.org/public/question_detail/43274
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