If you would elaborate for us on the topic of insurance: what is it? How does it work? How is it harmful to people? And what is the aspect of its prohibition, along with the evidence?

The questioner : If you would elaborate for us on the topic of insurance: what is it? How does it work? How is it harmful to people? And what is the aspect of its prohibition, along with the evidence? Because this is widespread now?

The Shaykh : I have no doubt that insurance, in all its forms, is not permissible; because it is a type of risk-taking and gambling, and risk-taking and gambling is gambling itself.

The Shaykh : Yes?

The questioner : ... .

The Shaykh : It is the very gambling that Allah (Mighty and Majestic) has forbidden in His Book in the well-known verse: , and this is supported by some authentic hadiths; among them is His saying (peace and blessings be upon him), as in "Musnad al-Imam Ahmad" from the hadith of Abdullah ibn Amr ibn al-As: . The narrator said: and al-kubah is the drum.
The Shaykh: And there is no doubt that gambling—and if you wish, I say gambling—has many forms, especially in the present age; where its forms have multiplied and its shapes have varied, and as it is said:
The Shaykh: The causes have multiplied, but death is one.
The Shaykh: So all of them converge with what Allah has forbidden of gambling. Among this is what is known today as "the lottery," and among it is what some call "the charitable lottery"—they claim!—so they change the names to deceive simple people and mislead them, as came in the authentic hadith: . And for this reason, the scholars say: changing the names does not change the realities of the named things. So khamr is khamr as long as it intoxicates, no matter how varied the names they apply to it are. And among these light names are alcoholic beverages.
The Shaykh: Once we know gambling and gambling, we return to what is called today life insurance, or car insurance, or real estate insurance, or the like; all of that is risk-taking and gambling. It is not based on causes that insurance companies engage in, but rather it is the lottery. It is well known that many of those who insure their cars, or their real estate and their warehouses of goods, or the like, pass through long years while paying the allocated amount every year for nothing =
The Shaykh: -- And upon you be peace and the mercy of Allah and His blessings, welcome, may Allah make you well, how are you? And upon you be peace, welcome, welcome, may Allah reward you ... --
The Shaykh: = passes through many years for the one who insured what he insured, while paying the allocated amount for nothing, which is the insurance. So the one who insures his car—for example—and this has happened to many of them, as we know—passed through about 30 years while paying, and no accident happened to him at all. So these amounts he paid, he did not pay them for anything at all except the name of insurance. And on the contrary, it may happen sometimes =
The Shaykh: -- Come closer, my brothers --
The Shaykh: = and on the contrary, it may happen that some of the insurers, in the first installment they pay on their new car, for example, the car is hit by an accident, so it is destroyed, so the company provides this insurer with a new car like his in exchange for what? The first installment he paid. I wonder, first: where did the company get this money from to buy this new car for this insurer? And second: in exchange for what did they pay the value of this new car? In exchange for one installment, which may be an amount of a hundred or a thousand or more or less. This is not the important thing. And it is very clear that the price of this car that was bought from the insurer is from the money of the other subscribers who insured their cars and no accident happened to them. This is the gambling and this is the risk-taking. And the companies, as you know well, and especially after the invention of the computer, this precise machine, so that they can do very precise calculations; such that every evaluation, for example, they do the calculations: how many accidents can happen? And what is the approximate value of these accidents? So they impose on the subscribers taxes to the extent that they compensate for these accidents if they happen, at the highest estimate. Then what remains for them is the profit they take in exchange for ink on paper, and nothing behind that!!
The Shaykh: It may be good on this occasion that I remind you that some of the prizes given to some of those who buy certain needs are of this type. They may sell in some boxes or cartons a card written on it with a reward or a prize of so much. And the simplest thing is the bottles of Pepsi drink or what is similar to it, where a certain brand comes out inside, and for that there is so much and so much. These rewards can be of the type of gambling—also—and they can be of the type of al-ju'alah (bounty). The difference between this and that is that we look at this reward: did it come out of the company's own pocket, or was the value of these prizes added to the price of that goods? In that case, this becomes gambling and forbidden, without doubt; because the one who wins does not win by effort, or by car, or by anything, but by mere luck; at the expense of the pockets of the other buyers who did not get these prizes. And without doubt, when the company puts these prizes and at the expense of the buyers and not at the expense of its pocket, it also calculates what is the value of these rewards? Let us suppose a thousand or thousands of thousands, so this is divided by the price of the goods and added to it, so this addition is at the expense of the buyers and not at the expense of the company. And here it is said—also—as we said before:
The Shaykh: The causes have multiplied, but death is one.
The Shaykh: All these causes lead to consuming the money of people by falsehood. And for this reason, I believe that it is not permissible to participate in insurance companies or deal with them, except what you are compelled to. There is a type of car insurance in some countries where the owners are forced to insure. It is called in some countries partial insurance, while full insurance remains a choice. So whoever is compelled to partial insurance, it is like the taxes imposed in some countries, where there is no way for the delinquents to avoid paying them, otherwise their lives would be disrupted. They cannot, for example, build houses to take shelter in; because there are roof taxes they call: honorary, and I don't know other things and others; so as long as a person is not given a choice in paying a type of these taxes, and he is forced to do so by the state; then from that—also—he pays the insurance... related to the car. But for a person to participate by his own choice, this is not permissible, for what has become clear in the previous speech that it is gambling and gambling, and that is not permissible by the prohibition of the Noble Qur'an. And we should not be deceived by naming things other than their true names.
The Shaykh: This is what I have regarding this question.