Disadvantages of Insurance. How to win on Life Insurance? How it affects you?

Aslamo Alikum,

Dear All,

Suppose A has bought a Life Insurance and B has not bought any Life Insurance.

A will now pray like this

O God, give me death early, the earlier I will die, more I will win from insurance company.

A’s children will pray like this.

O God, give death to our father, early he will die, more we will win from insurance company.

B will pray like this

O God, give me life (health) because I have nothing to get from insurance company if I die.

B’s children will pray like this.

O God, give our father life & health, because we are not going to get anything from insurance company.

Conclusion:

Buying life insurance means you are betting on your death, the earlier you die, the more you win.

Buying any insurance means you are betting that you will have a loss, the earlier you will get a loss, more you will win. If by God’s grace, you do not get any loss, then you will lose from your insurance.

Real Life Event

A person lived for 43 years with the grace of God without any insurance, then he bought life insurance and just after 2 more years, he died with heart attack. His children got some money but lost his father.

His children are sad to lose their father but feel happy to get some money in return and they say, their father happened to make a great decision by having life insurance.

But I have a feeling, once he insured his life instead of trusting in God, he could not live any longer. God knows best.

How Insurance Company works?

Insurance company makes you fear that you will get a loss sometime in future and you will become poor and miserable. You then start fearing and become their slaves.

Satan threatens you with poverty and orders you to immorality, while Allah promises you forgiveness from Him and bounty. And Allah is all-Encompassing and Knowing.

Quran 2:268

:salam2:

Excellent thread, very thoughtful.

Life insurance is typically a lump sum regardless of age, although it lapses after a certain age. The purpose is to provide security for your dependants.

My parents had life insurance and they are still alive. I NEVER engaged in the type of thought process you have indicated above.

My friend has 3 children under the age of 10. Her husband was killed in a car accident earlier this year. I am almost positive he had life insurance, and now she can breathe a bit easier because there will be money for her children to pay for their expenses, their education, as well as a home for them. It is a tragic situation and if she had to bear the financial burden all by herself, then she would have a very very diffcult time indeed, over and above the tragedy of being a young widow.

And, I will get life insurance so that there is money available to whoever is kind enough to arrange for my burial, dispose of my assets, probate, etc., when I die.

Precious Star said:

My friend has 3 children under the age of 10. Her husband was killed in a car accident earlier this year. I am almost positive he had life insurance, and now she can breathe a bit easier because there will be money for her children to pay for their expenses, their education, as well as a home for them. It is a tragic situation and if she had to bear the financial burden all by herself, then she would have a very very diffcult time indeed, over and above the tragedy of being a young widow.

And, I will get life insurance so that there is money available to whoever is kind enough to arrange for my burial, dispose of my assets, probate, etc., when I die.

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Assalaamualaikum sister,

I do agree there are advantages of having a life insurance for oneself.. The best example you yourself gave it, it help your friend and the family financially..
But isn't life insurance based on interests[Riba] ?? Well, that's what i have heard and am quite sure it is based on it.. Is it different in your country?

Peace

uniqueskates said:

Assalaamualaikum sister,

I do agree there are advantages of having a life insurance for oneself.. The best example you yourself gave it, it help your friend and the family financially..
But isn't life insurance based on interests[Riba] ?? Well, that's what i have heard and am quite sure it is based on it.. Is it different in your country?

Peace

Click to expand...

I have no idea, brother. But I can tell you that the majority of our financed-based services are based on interest. For example, do you live in the west and in a country that provides free medical care, transportation, etc? All of that is funded by interest-based investments and growth.

Do you work for an employer that has a pension plan? If so, that pension grows by interest. It is not different than how an insurance policy operates. So what are you going to do -- reach retirement age and then give your pension money away and work instead until you are 85?

Have you ever lost your job and had to go on public employment benefits? Yup, those benefits are derived from a large fund that grows via interest-based investments. Even welfare ("the dole") has its origins in a similar structure.

However, you do have the option of creating your own insurance plan, where you have control over the investments that form its basis. But you would need to be extremely wealthy to have the resources to fund such a venture.

We all have to make tough choices living as muslims in a non-muslim environment.

Precious Star said:

We all have to make tough choices living as muslims in a non-muslim environment.

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:salam2:

I know some commercial banks in the west are now offering Islamic banking as part of the option. alternative to conventional insurance is "takaful" which is based on Shariah law

Try to enquire from your local bank. Some famous ones are:
HSBC - amanah
Standard Chartered - Saadiq
Citibank - maybe?...

Perhaps it depends on local demand of the population for such Islamic product. Even non-muslim are considering the Islamic banking especially for loans as it's not based on fluctuation of interest.

assalamu alaykum

please do not give your personal fatawa, rather speak with daleel or ask a person of knowledge. Wa Allahu 'alam

jazakhum Allahu khayran

Assalaamu Alaikum,

Watch out, its a minefield. Every other month a new insurance scheme (vehicle ) is introduced. Its based on Interest more often than not. It should not have taken the boost for profit road, the insurance companies yet do that, and there is quite a lot of not so good things happening behind the scene. The social welfare contribution of these insurance vehicles is highly disputable. Funnily today's society in most part of world shared everything except food/medicine/wealth! Welfare society gets higher priority in this religion and works better too, if approached in right spirit.

Decisions in this matter, needs skill and consultation with practicing knowledgeable persons (but are far and few, making it a bit more difficult). If its forced on you [ due to policies] reduce the non-halaal component to greater extent, and avoid all that which is doubtful, is what most do.

Read : Life Insurance: Haram or Halal? ( Life Insurance v/s Health Insurance )

Assalaamualaikum,

In my country there is no Islamic style of insurance. Frankly, i know not the inside out of working of the insurance companies. But i do believe that Life insurance works on the principle of Interest.. And as sister preciousStar had mentioned, the insurance has its own positives in certain circumstances.

So what are the options i can take up?
And what can i do with the interest i get for keeping money in my bank account?

Peace

That explains why I drive carelessly! It's because of the auto insurance!

Peony Weed said:

:salam2:

I know some commercial banks in the west are now offering Islamic banking as part of the option. alternative to conventional insurance is "takaful" which is based on Shariah law

Try to enquire from your local bank. Some famous ones are:
HSBC - amanah
Standard Chartered - Saadiq
Citibank - maybe?...

Perhaps it depends on local demand of the population for such Islamic product. Even non-muslim are considering the Islamic banking especially for loans as it's not based on fluctuation of interest.

Click to expand...

:salam2:

On top of my previous comment, I found this on google. Be mindful that I have no information on their legitimacy, but we should make an effort to seek possible alternatives before opting the conventional insurance due to state of emergency.

Before making any purchase of the takaful plan, please ask lots of questions especially when it comes to the syariah compliance (this is what most customer's failed to do), hope these links would help you guys.

Sample Takaful Insurance provider:
India - http://www.bindaengroup.com/html/companies-insurance-services.htm

Pakistan - http://www.takaful.com.pk/
- http://www.pktcl.com/

US - http://www.zayantakaful.com/products.php (here is comment by US mufti)
US Takaful provider review - http://www.ambest.com/resources/takaful_review.pdf
US mufti statement on conventional insurance purchase in US

I do not hold the authenticity of the companies, but there's no harm to ask them for further validation. Wallahualam

uniqueskates said:

Assalaamualaikum,

In my country there is no Islamic style of insurance. Frankly, i know not the inside out of working of the insurance companies. But i do believe that Life insurance works on the principle of Interest.. And as sister preciousStar had mentioned, the insurance has its own positives in certain circumstances.

So what are the options i can take up?
And what can i do with the interest i get for keeping money in my bank account?

Peace

Click to expand...

:salam2:

Brother, even the Quran admits that alcohol has some benefits - but we don't drink it because its forbidden to us. Similar is the case of insurance/interest. Allah has forbidden interest, and consequently any interest-based insurance scheme, so muslims are advised to stay away from it.

Concerning the interest you get in your bank account - what most of the muslims do in the West is this: they either ask the bank to stop paying them interest in their account. And if that's not possible, look closely at the interest you get every month, and donate it to charity. Just we're not supposed to expect any reward for this donation, because in a sense we're giving away haram money and freeing ourselves from sin.

uniqueskates said:

And what can i do with the interest i get for keeping money in my bank account?

Peace

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There is no need to have an interest-bearing bank account. Most banks offer interest-free accounts. I myself have one, and everytime the bank suggests I switch to an interest-generating account I say "no" and they look at me like I'm crazy.

There are some that offer "cash back" as a reward for a certain number of transactions, but that's a different concept.

Tabassum07 said:

:salam2:

Brother, even the Quran admits that alcohol has some benefits - but we don't drink it because its forbidden to us. Similar is the case of insurance/interest. Allah has forbidden interest, and consequently any interest-based insurance scheme, so muslims are advised to stay away from it.

Click to expand...

Just out of curiosity.. Is there any specific reason[logical] why we are not allowed to take interest.. I know that doesn't account for our hard-earned money and therefore it's haraam.. Any logical reason?

Tabassum07 said:

Concerning the interest you get in your bank account - what most of the muslims do in the West is this: they either ask the bank to stop paying them interest in their account. And if that's not possible, look closely at the interest you get every month, and donate it to charity. Just we're not supposed to expect any reward for this donation, because in a sense we're giving away haram money and freeing ourselves from sin.

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JazakAllah Khair for that.. I will remember that and do the needful as soon as possible. InshaAllah
Peace

Precious Star said:

There is no need to have an interest-bearing bank account. Most banks offer interest-free accounts. I myself have one, and everytime the bank suggests I switch to an interest-generating account I say "no" and they look at me like I'm crazy.

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Assalaamualaikum sis,

JazakAllah Khair for the reply sister..
Yep.. I will do that.. But thing is, the bank in which my salary gets credited doesn't have the "no interest" concept. And Alhamdulilah, i have got a pretty tidy sum in it. Alhamdulilah.. So thats why asked what should i do for it..
Peace

uniqueskates said:

Assalaamualaikum sis,

JazakAllah Khair for the reply sister..
Yep.. I will do that.. But thing is, the bank in which my salary gets credited doesn't have the "no interest" concept. And Alhamdulilah, i have got a pretty tidy sum in it. Alhamdulilah.. So thats why asked what should i do for it..
Peace

Click to expand...

:salam2:

When there's a will there's a way...why not open a sole current a/c that does not earn interest, when your salary is credited then transferred it out into that a/c. Most banks offer online banking & often it's free.

Otherwise, the most common option is to keep track on the paid interest and donate it to schools or shelters for their utility bills or something that they would not consume....

Peony Weed said:

Otherwise, the most common option is to keep track on the paid interest and donate it to schools or shelters for their utility bills or something that they would not consume....

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Walaikumassalaam,

I would prefer to do this.. It's worth lightening up a few faces with their smiles..

Peace

uniqueskates said:

Just out of curiosity.. Is there any specific reason[logical] why we are not allowed to take interest.. I know that doesn't account for our hard-earned money and therefore it's haraam.. Any logical reason?

Click to expand...

Tabassum07 said:

Similar is the case of insurance/interest. Allah has forbidden interest, and consequently any interest-based insurance scheme, so muslims are advised to stay away from it.

Click to expand...

Not a valid reason? Does this fall outside logic?

"O you who believe, you shall not take usury, compounded over and over. Observe God, that you may succeed." [Al-'Imran 3:130]
"And whatever you give for interest to increase within the wealth of people will not increase with Allah . But what you give in zakah, desiring the countenance of Allah - those are the multipliers." [Qur'an 30:39]

I recollect a sermon in madrasa, where the speaker convinced "its cancer of society". Its, absolute lack of Social solidarity, by "Social Humans."

Note: In Christianity and Judaism, Interest/Usury was not allowed, but modified with time. Am told by reliable sources even Vedic/Buddhist texts have a low opinion of interest/usury.

UniqueSkates; said:

Assalaamualaikum sis,

JazakAllah Khair for the reply sister..
Yep.. I will do that.. But thing is, the bank in which my salary gets credited doesn't have the "no interest" concept. And Alhamdulilah, i have got a pretty tidy sum in it. Alhamdulilah.. So thats why asked what should i do for it..
Peace

Click to expand...

Peony Weed said:

:salam2:

When there's a will there's a way...why not open a sole current a/c that does not earn interest, when your salary is credited then transferred it out into that a/c. Most banks offer online banking & often it's free.

Otherwise, the most common option is to keep track on the paid interest and donate it to schools or shelters for their utility bills or something that they would not consume....

Click to expand...

Walaikum Ssalaam,

Some more points.

There are Islamic banks all around the world now, they provide alternatives, but research before settling on one. We try to minimize the interest component to extent possible, otherwise big amounts become a disposal overhead and can attract tax. When disposing the accrued interest amount discretely (without any fuss or show) for a social utility cause (like school building, infrastructure, natural disaster or even zoos!), declare the source of this "untidy sum". Some don't want it (Since Interest is not good for us, its not good for others too). A thought - "lets get the interest and use it for charity, is a wrong line of thought."

A joke among colleagues of muslims is "Give me your accrued interest as charity, rich fellow!"

Precious Star said:

Life insurance is typically a lump sum regardless of age, although it lapses after a certain age. The purpose is to provide security for your dependants.

My parents had life insurance and they are still alive. I NEVER engaged in the type of thought process you have indicated above.

My friend has 3 children under the age of 10. Her husband was killed in a car accident earlier this year. I am almost positive he had life insurance, and now she can breathe a bit easier because there will be money for her children to pay for their expenses, their education, as well as a home for them. It is a tragic situation and if she had to bear the financial burden all by herself, then she would have a very very diffcult time indeed, over and above the tragedy of being a young widow.

And, I will get life insurance so that there is money available to whoever is kind enough to arrange for my burial, dispose of my assets, probate, etc., when I die.

Click to expand...

If we live in a different time, the time of our Prophet Muhammad (peace and blessings upon him) for example, there would be someone who either marries a widow or the strong communal bond would support the widow. The children would also be taking care of their mother.

Because if we look at the inheritance share, a wife has 1/8 of the inheritance share, children gets more (received when they're of age). An-Nisa 11-12

It creates a stronger community. But since we don't, or a community of such no longer exists, life insurance does works.

Just hypothesizing based on my limited knowledge,though.

Awesome thread btw.