Q.1 What is the Islamic position on life insurance? Is it allowed in Islam? Churches and Temples receive life insurance proceeds once a person dies. Is this practice acceptable in Islam as a charity (sadaqah jaria)? Please explain. (Masood Khan, California)
A.1 Muslim scholars are divided on the subject of the permissibility of life insurance. Some consider it forbidden on the assumption that it involves a kind of gambling and it goes against the principle of taqdir in Islam. But there are other scholars who have equally argued that insurance is very different from gambling. Dr. Nejatullah Siddiqi in his book on Insurance in Islamic Economy has pointed out that gambling upsets the normal system based on work and reward and is inimical to equitable distribution of income and wealth, whereas insurance protects the disruption of the system by accidents and events beyond human control. A gambler takes risks in order to make more money, but the insurer's basic objective is to protect his/her assets and interests. Life insurance is also not against the principle of taqdir. Life insurance is actually an inappropriate term, because it does not insure life.
No one can insure life, health, or safety-- these things are in the hands of Allah. However, the insurance companies promise that in case of death, sickness or accident they will provide certain compensation to the family within certain limits that the parties have agreed upon. The insurance companies utilize the law of large numbers and thus collect a certain premium from every person and distribute it among those who incur the loss. For these reasons, many Muslim scholars have allowed insurance and they also do not see anything wrong in life insurance. I am inclined to accept this position and consider health, home, auto, and even "life" insurance permissible in Islam. We, however, must keep in mind that most of the insurance organizations today are involved in riba and other Islamically prohibited transactions. It is for this reason important that Muslims should have their own insurance companies based on Islamic economic principles. This was also the opinion of Maulana Mawdudi who said that insurance can be re-organized under Islamic principles so that it is free from all prohibited practices. In the absence of Halal Islamic insurance companies, Muslims are allowed to purchase insurance from other insurance companies because as a minority in non-Islamic states Muslims must protect themselves, their properties and businesses, and they must make provisions for their families. A prominent group of 'Ulama held a conference in Nadwatul 'Ulama in Lucknow, India in the early 70's and had suggested that Muslims should take benefit of insurance. All Muslims in America should have their wills written according to the Islamic rules of inheritance. It is very important that after our death our estates are distributed according to Allah's rules. Muslims who have life insurance should also provide proper instructions in their policy with full names of all legal heirs and their shares of inheritance, as per Islamic rules of inheritance. They are allowed to give up to one third of their estate, including the proceeds of life insurance, for charitable purposes to Islamic centers, schools, hospitals, Islamic relief agencies, or other Muslims charitable groups or organizations. Q.2 Is it correct that Allah has fixed everyone's age [lifetime] at the time of their birth? If the answer is in the affirmative, then on what basis or justification has God decided one person's age to be long and the other's short?
A.2 There are two things that we must keep in mind: one is the Knowledge ('ilm) of Allah and the other is the Decree (kitab or qada' ) of Allah. Allah's Knowledge does not change, but He has the power to change His Decree. In the Qur'an and Hadith we read that Allah subhanhu wa ta'ala has written in His Decree every person's age before his or her birth.
Allah says, And Allah did create you from dust, then from a sperm drop, then He made you in pairs. And no female conceives, or lays down (her load) but with His knowledge. Nor is a person granted long life, nor is a part reduced from his life, but it is in a Decree (ordained). All this is easy for Allah. (Fatir 35:11) The Prophet -peace be upon him- explained this in his famous saying:Verily the creation of each one of you is brought together in his mother's womb for forty days in the form of a seed, then he is a clot of blood for a like period, then a morsel of flesh for a like period, then there is sent to him the angel who blows the breath of life into him and who is commanded about four matters: to write down his mean of livelihood, his life span, his actions and whether happy or unhappy.... (Al-Bukhari and Muslim) Thus every person's age is written before his/her birth according to Allah's will and decision. But this does not mean that our age cannot increase or decrease. Muslims are allowed to pray for long life and there are certain deeds that can increase a person's age. This does not change Allah's ultimate knowledge, but it means that by Allah's permission certain factors (asbab) do contribute to increasing or decreasing the length and quality of people's lives. Islam emphasizes Allah's knowledge and power, but it also recognizes the laws of cause and effect and human freedom.