Is Life Insurance Haraam Or Halaal?
Is Life Insurance Haraam Or Halaal?: The whole purpose of getting a life insurance policy is to secure your dependents’ future, to leave something behind for the beneficiaries to fall back on, in the event of one’s passing away. Generally how life insurance policy works is that the policy holder pays a regular premium dependent on the face value of the policy and should the policy holder die from a natural cause or accident, the designated beneficiaries will receive some money, i:e, insurance.
Insurance in Pakistan is a booming industry but there has been some debate on whether life insurance is haram or halal.
Although there are various permutations and variable types of life insurance policies, largely all of them fall into two main categories.
Term Insurance
Term insurance is a form of protective insurance; it is paid out to the dependents in the case of death within a certain period. That is to say, it is very much the same to all the other kinds of protective insurance policies. According to hadith, the kind of gharar involved in modern insurance is not forbidden. The numerous benefits of insurance outweigh the negatives involved.
Whole Life Insurance
This category of insurance is a mix of both protective insurance and an investment opportunity. According to religion, the permissibility of the investment is contingent upon the underlying assets that are invested in. One can deal with this situation by either getting a policy allowing one to dictate what underlying investments will be, and then selecting all Shariah-compliant assets or selecting a policy beforehand that offers Shariah-compliant underlying assets only.
Insurance in Pakistan is a research-oriented business and they already provide multiple options satisfying to different types of customers. If you want to buy a life insurance policy but are confused about its legality in Islam, simply first check if the policy under scrutiny is term insurance or whole life insurance. If it is a term insurance, you are good to go but if it is a whole life insurance, it will be better to check its terms and conditions and the status of investments being sharia-compliant.
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