Shar‘i Ruling on State Life Insurance in Light of Qur’an and Ḥadīth
Source: Aḥkām wa Masā’il, Issues of Buying and Selling, Vol. 1, p. 361
We are facing a significant issue. My friend and I work as representatives of State Life Insurance, but we hear conflicting opinions that leave us confused.
We are unable to decide what to do, so we decided to seek clarification from you with a detailed explanation of the Shar‘i ruling on State Life Insurance in the light of Qur’an and Ḥadīth.
From our perspective, State Life seems free from ribā and sin because:
◈ The entire business of State Life runs on commercial principles.
◈ Profits are distributed equally between the company and policyholders.
◈ If the company incurs a loss, that loss is also borne by the policyholders.
◈ For example, in 1977 State Life suffered heavy losses, and policyholders could not even recover their deposited amounts.
◈ We have several proofs of the business methods of State Life which we are ready to present.
◈ Moreover, State Life also provides interest-free loans.
Therefore, we request you to clarify in light of Qur’an and Ḥadīth:
Al-ḥamdu lillāh, waṣ-ṣalātu was-salāmu ‘alā Rasūlillāh, ammā ba‘d!
According to our knowledge and the principles of Dīn, all insurance companies operating in the country, including State Life Insurance, conduct business based on ribā (interest).
On this basis:
◈ The business of these companies is ḥarām.
◈ Working in these companies is also ḥarām.
◈ Buying life insurance (or similar policies) is also Shar‘ī impermissible.
ھذا ما عندي والله أعلم بالصواب
Source: Aḥkām wa Masā’il, Issues of Buying and Selling, Vol. 1, p. 361
❖ Detailed Question:
We are facing a significant issue. My friend and I work as representatives of State Life Insurance, but we hear conflicting opinions that leave us confused.
- Some scholars say that working in State Life is sinful and that it is entirely based on ribā (interest).
- On the other hand, some scholars themselves have purchased State Life policies.
We are unable to decide what to do, so we decided to seek clarification from you with a detailed explanation of the Shar‘i ruling on State Life Insurance in the light of Qur’an and Ḥadīth.
From our perspective, State Life seems free from ribā and sin because:
◈ The entire business of State Life runs on commercial principles.
◈ Profits are distributed equally between the company and policyholders.
◈ If the company incurs a loss, that loss is also borne by the policyholders.
◈ For example, in 1977 State Life suffered heavy losses, and policyholders could not even recover their deposited amounts.
◈ We have several proofs of the business methods of State Life which we are ready to present.
◈ Moreover, State Life also provides interest-free loans.
Therefore, we request you to clarify in light of Qur’an and Ḥadīth:
- Does State Life Insurance involve ribā or not?
- If yes, in what way?
- If not, on what basis?
❖ Answer:
Al-ḥamdu lillāh, waṣ-ṣalātu was-salāmu ‘alā Rasūlillāh, ammā ba‘d!
According to our knowledge and the principles of Dīn, all insurance companies operating in the country, including State Life Insurance, conduct business based on ribā (interest).
On this basis:
◈ The business of these companies is ḥarām.
◈ Working in these companies is also ḥarām.
◈ Buying life insurance (or similar policies) is also Shar‘ī impermissible.
ھذا ما عندي والله أعلم بالصواب
