Question:

Is it permissible for Muslims who live as minority communities in non-Islaamic countries and who have no supporter or guardian other than Allaah, to take out insurance policies? The insurance company, through monthly payments, will take care of a person’s children after his death?

Response:

According to my knowledge, insurance policies are based on winning and losing. Every policy or contract that is based on this is in fact gambling, which Allaah has forbidden in His Book (Qur.aan) and has placed alongside wine and the worshipping of idols. He, the Almighty, says: {O you who believe! Alcoholic drink, gambling and divining with arrows are an abomination of Satan’s doing. So avoid them in order that you may be successful}, [Soorah al-Maa.idah, Aayah 90].

Let me give you an example, You insure a car and pay one thousand dirhams every year in order that the insurance company guarantees to cover the cost of whatever might happen to the car, whether it is written-off or just damaged. If a year passes and the car has neither been written-off nor damaged, then the insurance company is the winner and the insurance policy holder is the loser. If, however, the car is written-off or badly damaged, the policy holder will get back more than he paid to the company. In this case, he is the winner and the insurance company is the loser. Every contract which is based on this is gambling and hence forbidden.

However, it has been mentioned to me that in some countries people are forced to take out insurance policies. So what can Muslims do if this is the situation? In my opinion, he should pay whatever money that he is forced to pay for insurance but he should not consider that it is a legal contract or agreement, but rather that it is money paid unjustly under pressure. If no loss occurs, this is by the Grace and Mercy of Allaah towards him and the money has been taken from him unjustly and he shall find it on the Day of Resurrection. In the event that he suffers some loss to his property and the insurance company intends to reimburse him, then, if the amount he is due back is equal to what he paid for his policy, he can justly take it. If, on the other hand, what he is due from the insurance company is more than he paid, he should not take more than the amount that he paid them. In this way, the process will, in my opinion, be in accordance with Islaamic law.

Shaykh Ibn ‘Uthaymeen
al-Aqalliyaat al-Muslimah – Page 63, Fatwa No.3

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