What is the ruling on life and automobile insurance?
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The questioner : He says: Honorable Shaykh, what is the ruling on life insurance? Is there any permissible life insurance? Another question was asked regarding the ruling on insuring cars, goods, and the like.
The Shaykh : Yes, yes. I am asking this questioner about life insurance: if the angels come to take his soul, do they turn to the one who took out the insurance? The answer is no, and this is not possible. Therefore, life insurance is nothing but consuming wealth unjustly. A person may insure his life and die less than a year after taking out the insurance, or he may insure it and live for a hundred years or so. In that case, it becomes gambling (maysir) between the insurance company and this insured person. As we all know, Allah has forbidden gambling and linked it in His Book to intoxicants, divining arrows, and lots. He the Exalted said:[Al-Ma'idah 5:90] We say the same about car insurance: it is not permissible for a person to insure his car. If we assume that he gives the insurance company five hundred riyals per year, the year may pass without an accident occurring, in which case he is the loser and the insurance company is the winner. Or an accident may occur that consumes five thousand riyals, in which case he is the winner and the insurance company is the loser. Any contract that fluctuates between gain and loss is gambling, which is not lawful and not permissible, because it falls under the category of gambling. Yes.
The Shaykh : Yes, yes. I am asking this questioner about life insurance: if the angels come to take his soul, do they turn to the one who took out the insurance? The answer is no, and this is not possible. Therefore, life insurance is nothing but consuming wealth unjustly. A person may insure his life and die less than a year after taking out the insurance, or he may insure it and live for a hundred years or so. In that case, it becomes gambling (maysir) between the insurance company and this insured person. As we all know, Allah has forbidden gambling and linked it in His Book to intoxicants, divining arrows, and lots. He the Exalted said:
O you who have believed, indeed, intoxicants, gambling, [sacrificing on] stone alters [to other than Allah], and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful.
يَا أَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنصَابُ وَالْأَزْلَامُ رِجْسٌ مِّنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ
Source
لقاء مفتوح ببريدة - 2 — archive.org (26:18)
The Arabic text is a machine transcription of the audio recording.