Face Of Insurance



here are mixed opinions on this in Islam. If I generalize then orthodox Islam is against and contemporary thinking allows traditional insurance including health insurance.

What is however almost universally considered allowed is takaful which can be loosely considered mutual cooperative insurance.

Personally, I believe there is no harm as:

  1. Overall it’s more beneficial
  2. Any unislamic underlying investments that the company might make is similar to investments that most traditional companies would make anyway as part of their investment strategy.

Insurance in Arabic (& Urdu) is Ta’wun which literally means cooperation. So insurance is considered cooperation and actually its a major social contribution to society. How? Check the example below.

Let us suppose 5 friends got together and planned to contribute Rs 10000 every year and kept that amount in a locker and decided to use that amount when any of the 5 friends is in danger or needs money. They decided to give entire Rs 50000/- to him/her.

{Isn’t that wonderful 5 people helping each other without any discrimination of religion, gender, caste or creed? (This is the basic funda of insurance)}

This is absolutely HALAL and this is how insurance works. Many people contribute and help someone to use the entire amount or part of it in need of crisis.

Now, the question is when does it become Haram? (Illegal)

Let us take the same example from the above scenario.


Now at the end of the year those 5 friends still have Rs50000/- in their account so one of them decided to invest that Rs50000/- somewhere.

  1. One friend suggested to buy Gold
  2. One friend suggested to Buy land
  3. One friend suggested to keep it in fixed deposit and earn interest
  4. One suggested to start a wine shop and
  5. One suggested to Gamble

The first one is still Halal

The second one is still halal

Third, fourth and fifth is not.

So that is how an insurance becomes halal and haram.

First thing first I am not an Islamic scholar and do not claim to be an Islamic scholar but I work in India and in the Insurance sector, I have come across many queries and question on Islam and Insurance, and have faced real difficulties while implementing social insurance program where coverages are Below Poverty Line population and only criteria for enrolment is either having BPL card or part of groups like weavers and artisans.

the basic question the people in this class is whether this is HALAL as per Islamic jurisprudence and most people cannot define what they mean by insurance company being Halal and then a religious head or community head would intervene and raise question on Interest and Gambling and some educated people would come around trying to understand where Insurance companies invested their funds ?


zahid lar

hard working is key to success

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