What is life insurance, and is it forbidden or permissible?
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The questioner : This is her letter, which reached us from the sister A.M.A., whose address is in the north of Irbid city, Jordan. In her letter, she asks: What is life insurance, and is it forbidden or permissible?
The Shaykh : I do not know the exact meaning of life insurance.
The questioner : Yes.
The Shaykh : But I do not think anyone insures life, because when Allah’s appointed time comes, it is not delayed, and insurance is of no benefit in that. If the insurance is intended for a person to pay money in exchange for a specific sum of money being guaranteed to his heirs upon his death, then it is forbidden, because it is a form of gambling.
The questioner : Yes.
The Shaykh : This is because the payer is taking a risk; he does not know whether he will gain more than what he paid or less. Any transaction that revolves between gain and loss is of the forbidden gambling, which is not permissible except for what the Shari'ah has exempted in the matter of betting on the hoof, the nail, and the spur.
The questioner : Yes.
The Shaykh : Yes.
The Shaykh : I do not know the exact meaning of life insurance.
The questioner : Yes.
The Shaykh : But I do not think anyone insures life, because when Allah’s appointed time comes, it is not delayed, and insurance is of no benefit in that. If the insurance is intended for a person to pay money in exchange for a specific sum of money being guaranteed to his heirs upon his death, then it is forbidden, because it is a form of gambling.
The questioner : Yes.
The Shaykh : This is because the payer is taking a risk; he does not know whether he will gain more than what he paid or less. Any transaction that revolves between gain and loss is of the forbidden gambling, which is not permissible except for what the Shari'ah has exempted in the matter of betting on the hoof, the nail, and the spur.
The questioner : Yes.
The Shaykh : Yes.