Insuring one’s life

Question

Question: Is life insurance permissible in the Shari‘a or not? Nowadays many life insurance companies have been set up in India, whose rule is that if someone takes out insurance, he must take it out for a specific period and pay the company a fixed sum every six months. For example, at the age of 25 I took out life insurance for 25 years at a half-yearly sum of twenty-one rupees 7/ (?); now every six months I have to pay the company 23.

Answer

In the case asked about, the contract is fasid (defective) and impermissible, because the company pays out more than the amount of money the insured person has paid it. That excess is either in exchange for the life of the insured, or in exchange for property.

Source: Fatawa Mahmudiyya

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