Finance column: Life insurance, is it Haraam? Is it different to death committees?

 

shababfinacecolumnLife insurance, is it Haraam?
Is it different to death committees?
There have been many arguments over the years between Muslims scholars and generally answers sought in Islamic Fiqh (jurisprudence) with reference to if Insurance really is Haraam (forbidden) Some say insurance is completely Haraam. This is because it has elements of Gharar (uncertainty) Maisar (gambling) and Usury (interest) Other highlight its not insurance that is Haraam because it is the same as death committee’s, but what is Haraam is where the insurance company invests the money they get in premiums. Other people perceive that insurance is Haraam, but they also say, well what happens if I die? Who pays my mortgage off, and is it not looked down upon for a Muslim to pass away in debt? 
My view point is yes insurance is Haraam due to the insurance company investing the funds into fixed interest. However insurance itself is designed to take away uncertainty upon death, and is it really gambling? Maybe I question the overall thinking because I have seen the effects death can have on a family’s income as well as their standard of living.
The other aspect that scholars do not really answer is when a Muslim passes away with debt. During the funeral prayers, the Imam usually asks if this person owes someone money, and if they do, then to see the deceased’s family to pay the debt off. Most of us have mortgages; therefore upon our deaths whether the mortgage is Shariah or conventional the bank will want their money. I am not sure about your family, but I doubt my brother would want to be saddled with my mortgage on my death, or that it is fair on my parents to pay my debt, when they are near retirement.

I myself am forced to be a member of a death committee because most of my family are members of a plan, where we get paid £3000 if a member of our family passes away to help with funeral costs. The cost of this committee is £20.00 a year, which is not allot of money, but then again is the committee a form of insurance because it will only make a payment if something happens to me or my immediate family.

We do not consider what happens on our death, and more to the point what happens to our families. I am not sure about the rest of you, but I am fairly confused after researching if insurance is truly Haraam. The majority of scholars say yes, but they forget that in the real world, they need to guide us more, and show what we should do with our debt on death if we do not have insurance.

 

 

 

 

 

 

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