Thanks you for bringing some practical sense to this topic with evidence. Most scholars just quote that it deals with Riba and is like gambling so it’s Haram 🙄. Love the car seat analogy 😱
I’m in the Financial Service field. We educate families on buying Term Insurance and investing the difference. When I sit down with the Muslim community, they are hesitant on applying for the insurance, but when someone in their household Dies, you’ll see a GOFUND ME account set up, begging people to help with the funeral costs and their family left behind. Thank you brother for clarifying this.
Jazzak Allahu Khairan brother! Ive been avoiding Insurance ever since Ive read about an article that suggested that it was like gambling in that there is a winner / loser in that transaction. Also that that it presupposes the existence of uncertainty and how that uncertainty can be seen as gambling. I will only comment though on the comparison with the Child seat. The Child seat being a device that protects your child from injury/death, whereas the insurance doesnt do the same thing- it does though secure your family financially in the event of the principal's death- that is through a legally binding promise from the insurance firm-- Which up until this point i found hard to visualize as a product/service until you explained it clearly. Than you again.
Buy term and invest the difference . We must understand this , so many Muslims say haram and leave nothing to their family. I’ve helped families for years protect their income . Thank you for your information. Salaam Alaikum
This is the most thorough explanation I’ve seen so far. Not only does it explain all the ways it is Halal but it also provides an honest description between Whole life insurance and term insurance.
This is a terrific video. I am a financial coach who teaches people to never buy permanent life insurance and only to buy term. This video will help me lead many of my islamic friends to making a wise decision for their families!
So many Muslim sheiks speak Nice honey 🍯 words for a perfect world and perfect ummah. But when you are crippled, broke, divorced, or widowed, you will see other Muslims turning their faces and backs to you when you have your hand out! They will not be clamoring to provide you and yours maintenance or long term care. They will tell you to go away and ask Allah (swt). 😮. They will not be adopting your orphaned children either. They will send them to the orphanage. How difficult is it in Islamic countries to marry if one is an orphan?!?! They will then say orphans should marry orphans 😂. Many cultures of Muslim people are messed up & backwards. They like to pretend that racism doesn’t exist in Muslim communities also. Let’s start getting real and being progressive in this deen
In permanent life insurance iul and Ul the cash component you acquire is given to your beneficiaries. It is not charged an interest. It builds on interest. You also do not lose money either. It grows at a cap of 9-15%. If the stock market goes up 20% for example and your cap is 10% you get 10% and the company gets 10% if the stock market goes down 20% you neither lose nor gain. There is no risk, no gamble. Insurance is what backs up our economy system.
Salam. Is VUL or Variable Universal Life insurance (insurance with investment) considered a term insurance? May I know your stand if this is haram or halal?
@practical islamic finance: Jazakallahu khaira for your enlightening insights! Brother, I've a question, please clarify me. Here in India, we have one subdivision in term insurance named return of premium. It costs bit more than pure term plan. Th benefit over the later is in return of premium term insurance, if we survive on termination of our term, they will pay back what we have paid at that point of time. So, will this be considered as loss includes interest? Kindly provide your valuable guidance! Regards, Rameez Raja
The car seat example is off. The car seat actually prevents the child from possible major injuries same as the seat belt! However the life insurance doesn't protect you from anything you only recieve money in return for death. Iife insurance is more like registering a price on all passengers in your car if they get injured or die due to an accident. So you get an amount of money in return for death or injury rather than an added preventative feature against injuries
@@practicalislamicfinance still your comparison is off and misleading ! You can't compare a preventative measure to compensatory measures . A car seat is ment to reduce or prevent injury and will benefit even without an accident occuring since a child uses it for sitting . Comparing to receiving money after death is completely wrong. One is preventative and the other is merely compensatory!
Life insurance is more like you pay us incase you die we pay your family Ransom that's it. how could you go ahead and use the car seat logic here ?! There is no added preventative or safety measure here to protect you financially NOW . Both families are at same risk if they go bankrupt before death of the "breadwinner ". Actually the family with no life insurance would have more cash in hand since the didn't spend it on the monthly payments
THE LEVANT بلاد الشام life insurance is meant to prevent financial devastation of the family of the deceased or at least soften the financial blow. Also please calm down I’m trying to have a rational discussion.
THE LEVANT بلاد الشام what about in case of death which family is better off all else equal? The family whose breadwinner had life insurance or the one without?
I get that the cash accumulation component is Haram, but you're grossly misunderstood of the access and benefits for permanent life insurance. I am not here to convince you to get permanent life insurance, because of the haram component. However, you're completely wrong about how the cash access works for permanent policies... I'll pray for you and for everyone believing the misinformation. That being said, term insurance is great for anyone that doesn't have insurance. Life insurance in its purest form is buying money at a discount, and term insurance with living benefits is a great way to protect your family, assets, and loss of income. On a personal level, I like permanent life insurance, but also like having terms to supplement the death benefit need. For those that need to purchase life insurance and adhere to halal/haram principles, I feel the growth of the cash value would be the ONLY reason you wouldn't get a permanent policy. So that being said, if anyone needs a term policy, feel free to hit me up :) I am happy to assist in protecting your family in the event of a death in the family.
Yea he should have just stuck to speaking about term because he doesn't have an ounce of understanding about whole life. I'm surprised that Muslims aren't opposed to term as well because all you have to do is a quick search and find that only 2% of them pay out so wouldn't that mean you're gambling 98% of the time. A whole life insurance contract is a legal document with guarantees and it can be fully paid up in a single premium 5 years or 10. Not to mention the gross misrepresentation of the cost. In mutually owned insurance contracts it's possible to structure the policy as a 90/10 which 90% goes towards the cash value and 10% goes towards the base premium. Its weird to see people saying buy term and invest the difference but calling Whole Life Insurance gambling. This is definitely the twilight zone. Between corporate buy backs and false over evaluation in the market it's legalized gambling.
The value is zero before he dies , thats the whole deal. They only benefit if and when he dies , before death there is no benefit. For example, both the insured and uninsured could go through a financial crisis and loss all their wealth , they would both be in the same financial situation. Regardless of life insurance! I don't see how the insured benefits while alive , I see how it adds benefit after his death only !
It's not aqd e tijari ... not a business agreement... to see profit and loss..it's not a gambling business... It's purely Risk management for certain period, it's simply a aqd e tawooni, It's not a agreement of loan... It's not a agreement of currency exchange to one can think about profit and loss
I have a question if a person paid a premium for 10 years and it is a whole amount paid was 50 thousand and he died and the company pays 250k, then they are paying him 200 K more than what he paid. Isn't this like gambling? isn't it like winning lottery?
Participating whole life does not encourage interest, and I can show you mathematically how using your policies growing cash value to buy Other assets is much wiser then buy term invest the difference.
Brother I have an investment question. Is investing in leveraged ETFs halal in Islam? If your answer is no because they use leverage then why is it halal to invest in stocks of a company which have taken a bank loan? As leverage and bank loans are both haram in Islam because of Riba
If insurance are halal doesn't it imply to derivatives trading especially options cz in it's broad sense options are quite similar to insurance and most ulama consider it haram due to gharar and maysir wheres of we see the exchang mitigates the gharar of contract ratification and proper analysis and strategies take out the point of maysir and the only uncertainty left is the price and volatility of the underlying asset. Also options are not always a zero sum game.
Salam o alaikom brother. I am thinking about buying Roth IRA. I did so many researches to find out if it is Haram or Halal? But count not find anything. Can you please talk about it? Jazakal Allah khairan
A Roth IRA is a vehicle to invest into something. Vehicles are not haraam by nature. What you choose to invest inside your Roth IRA account must be vetted. For example, if you deposit $6,000 into your Roth IRA, either you or your financial institution now has to purchase stocks using that money. Ensure that the stocks purchased are halaal.
I would like you to respond to this question please!!! My organization provides life insurance to every employee, and its not employee's choice to take it or leave it, every employee has to have it and also employee is not paying for this insurance premium, the company is doing that for him over and above his salary, and in case of death, the employee's beneficiary will get a certain number of salaries. whats the ruling on this sort of insurance?
Hi, need your advice In this. I just stupidly bought somewhat like a whole life insurance policy, except that it's tied with invesment. So an investment linked with insurance where certain amt of my premium is paid to insurance another to etfs, bonds etc. Im considering of bailing it totally since I started it a few months go, I would lose a few thousand dollars alr 😭 but just needed a second opinion if I were to keep this, there is still the element of interest in it no matter how much of the premiums go to investment am I correct? I don't want to use smth which obviously incurs high amt of riba. Ur reply is greatly appreciated!
What about accidental death covers which we get as complimentary from bank while holding a debit card or credit card? i have 7000$ accidental death cover on debit card and 70000$ on credit card. will it be haram if my family claim that amount after my death?
The problem is the lack of transparency payout of the conventional insurance, be it term or whole life. When you pay the premium, the insurance company will use that money to invest. What the insurance company invest in, is unknown, which can be gharar. They could have invested in bonds which deals with riba or haram activity equity company. This is the ethical problem. The Muslim leaders should have come out with a halal solution. Allah has mentioned in the Quran, for every problem, there is a solution. Can we die in peace knowing that our beneficiaries are receiving money from haram sources. Each to his own.
Assalamu alaikum, thank you for shedding light on this matter. In your opinion why have most fiqh councils leaned on the prohibition opinion regarding life insurance? If I’m not mistaken, late Sh Mustafa Az-Zarqa (rh) opined that life insurance is permissible if the premiums are invested in stocks that aren’t haram. You describe term life insurance like a sale where you pay for a ‘legally binding promise’ of financial security. That’s the product if you like. If it’s a sale, then why are you getting your premiums back with compounded interest (I’m unsure whether this surplus is in essence Riba). If you hold it’s not riba, it’s profit from investment...then its closer to an investment, if not actually is an investment. And so the point of which avenues your investment is being used in, surely stands ? I’d be interested to hear from you. Salam :)
@@practicalislamicfinance thank you for response. I should say that my uncle is paying for my life insurance policy for my children to inherit. Sorry for confusion. I'm assuming as a Muslim this isn't permissible but I could be wrong.
Assalamu alaykum. I'd kindly like to ask a few questions on this please. I have learnt a quite bit from you already alhamdulillah, but now on this issue I have a few concerns. Firstly, how does the family (i.e. beneficiaries of the policy) spend or allocate the money among themselves?
والله this is very misleading. There is no mention of why the consensus of scholars say that life insurance (all insurance outside of necessity) is prohibited. It doesn’t tackle any of the reasons why fiqh scholars say it is impermissible. & the explanation of gharar was missing the point in which most scholars argue life insurance is impermissible, which is you can pay for something & get no benefit in return or you can pay very little & be given a huge reward. The likelihood of there being someone who loses (from a financial standpoint) is very likely & almost always the case. Also, if you’re profiting off of investments, you must know that you’re money is only invested towards that which is halal. Just like we can’t sell spirits, we can’t invest in them either. This video concerns me so much because just like Islamic financial institutions (not all, but some) it preys on the ignorance of people not being able to question or push back on claims & statements because they know very little about the fiqh of business transactions. Islam discusses concepts clearly, so change the name all you want, if it fits into certain boxes, it takes the same ruling regardless what you label it. I ask Allah to grant us sincerity & honesty. Posts like this scare me very much because it doesn’t even take into consideration how we’re supposed to respect our scholars & how they came to the conclusion that insurance is haram by default & it ignores how we reach rulings in islam (Quran, Sunnah, Ijma’, Qiyas, etc). Among other things. والله المستعان
Thts the case fr many people akhi, dont regret over it, I hv got clarity on this topic only after spending a quarter of my wealth on medical expenses which is sad but true 🙂🙂
Informative! How can I buy a house 🏠 Islam without falling into interest. Is there Muslims own financial institutions that can facilitate my needs. I live in Canada
Assalamualaikum brother thanks for your video. I am totally disagree with you on term or permanent Life. Everybody talking about wholelife but they have no idea about IUL(index universal life).And you said term cheaper absolutely wrong.See the real number. A 30 years old man will get a 250K term for 30 years will pay 230 per year so Total 230*30=6900 Nothing happen so he will renew it now at age 60. A 60 years old man will buy a 25 years term that's the max age they will allow so 60 years old man will pay $2392 per year so for 25 years he paid 2392*25=$59800. So total at age 85 he paid $6900+$59800=$66700 for 250K coverage. Now In IUL(index universal Life) 30 years old man will pay $108 monthly $1293 yearly so at age 85 he paid total $71,082 for 250K death benefit. And He got $225,578 cash value which he can access anytime tax free.And if he don't withdraw the money it will be added with death benefit so he got $475,578 in death benefit.If he withdraw the cash value still he left $250K for the family.At age 88 cash value $231,932 and death value $479,483. After age 88 cash value will decrease slowly for cost of insurance. So which one is expensive. A little bit about IUL.We can design the product as tax free retirement supplement where i have to over fund the policy and 90% of death benefit I can access tax free. Or we can add Long term care as a rider in case we become disable it will pay 2% of death benefit every month to the service provider.Average cost of nursing home is now $83K per year think about after 30 year. Does it has Gharar?. Its clear in the contract It has a floor .75% and a cap 15% depends on company.interest is not fixed .It will show in illustration the possible outcome.Guaranteed death value with non guaranteed cash value which depends on market.money is not directly invested it stock market. And about term I know about a mother who is 79 next year 1 mil policy will expire she was telling I wish I die next year my kids will get the 1 Mil.Is it ok in islam.Her entire life she paid premium and got nothing but peace of mind. But its ok for someone who don't have the money definitely I will recommend term something is better than nothing.But try to get the permanent one later on.Because the moment you need the coverage more you are not even insurable.
Walaykum Salam brother, my apologies for the late reply. 1. A 30-year-old man may need life insurance but it's far less likely that a 60-year-old man will. Life insurance is meant to be used as a tool to take care of your family in case you pass unexpectedly while you still have dependents. Hopefully, when someone reaches 60 years of age, their children are self-sufficient and they have enough savings and retirement investments to sustain their wife in case they pass. After all, they only have an average of 5 years left in their work-life anyway. So they likely won't need life insurance. That's the first point your calculation gets wrong. 2. As for the other person that took out the permanent life insurance, approximately 26% of whole life insurance policies are surrendered within the first three years because they can't keep up with the large premium payments and 45% are surrendered within the first ten years. A very small minority of permanent life insurance policies holders don't eventually let their policies lapse because they can't keep up with its high payments. So it's more likely than not that permanent life customers will surrender their policies before their death after having paid more than 10 times what they needed to in the meantime. Not to mention the extremely poor returns these permanent life insurance policies typically have for the cash value (around 2-3% which is horrendous and primarily comes for interest-based products which are haram). Alternatively, the permanent life customer in your example could have taken out a term life insurance policy and invested the difference in a well-diversified halal portfolio which would have historically earned 8-9% annually and they would have free access to it penalty-free and wouldn't have to borrow against it or any of the other shenanigans that permanent life insurance companies pull on their customers. No matter how you slice it, permanent life insurance is a huge ripoff, 10 times the cost for the same death benefit. Get Term life insurance and invest the difference. No matter how you slice it, it's the more prudent choice. WsSalam.
Thank you brother for your reply. I am not talking about whole life which has very poor return and they don't give cash value to client.I am talking about IUL which is also a permanent life insurance which has great return and it has a investment option too. Is it permissible in islam.I agree it's expensive .But if some one can afford it because they are saving money as cash value for retirement and having protection for the family same time.
@@sirajummunira8599 You are both overlooking another permanent policy, and whole life policies sold by mutual companies. I have an Endowment at Age 68 from a mutual, and 1. The cash values grow faster than whole life which assumes death at age 100 and pays whatever cash value then. 2. As a mutual company it pays dividends (profits, not interest) annually. Options for the dividends are a) cash b) leave in at interest c) paid up additional insurance. 3. with PUAs, the face value increases annually for the beneficiaries, AND their cash values are added to the base policy's cash values.that the owner can cash out or borrow. Any loan is deducted from the payout on death or at the endowment age, if not repaid of course. 4. The endowment can be taken as lump sum and invested elsewhere. 5. The portion of the payout that is the return of premium is not taxable (having already been taxed), only the amount over total premiums paid is taxable. 5. The payout options at the Endowment age for the insured include lifetime income (terrible if you die 1 year after starting payments), Lifetime Income 10 Years Certain, 20 Years Certain, etc. That means if you die within the 10 years, your beneficiaries receive the remainder that would be paid, if you live 30 years, you get all of the policy's vale in the first 10, and the insurance company's money in the remaining 20 at the same amount per year. That's ok because you stopped earning dividends on the principal when the payout period began. I actually have a small one of these (so the premiums would be low and affordable quarterly or semi-annually, not monthly and thus able to hang on to in the worst of tough times), kept for 38 years. The total premiums paid will be 73% of the original Face Value, but only 28% of the endowment benefit, because of the cash values of the PUAs. Now, if I outlive the 10 year certain period, which I am statistically likely to do by 12 years, the premiums paid will be 13% of the amount I receive. Sure, there are other investments that pay more, but they are nowhere near as secure or predictable, require much more management, and do not have the added value of the death benefit that continued to grow and protected my beneficiaries all of these years. It was a form of enforced savings plan for retirement with after-tax dollars, too. Given the number of times people's 401Ks and IRAs and home values have tanked, or job loss with loss of company term insurance wiping out their savings, having something like this, even a small one, can mean a lot to you, not just your beneficiaries.
🎉Thank you Brother. 😮😢 What person wants to die & leave their spouse destitute?! People won’t take care of them. Don’t leave your spouse & kids to the mercy of people!!! An aged spouse or disabled child can’t fully provide for themselves. It would be heartless to hurt your family like that.
SubhanAllaah wal Hamdulillaah!!! This is SoO sad, you should Fear Allaah!!! Shame on you as you are calling the Muslims to the Disobedience of Allaah and His Messenger (sallallaahu alaihi wa sallam!)
Most sources say life insurance is Haram. With respect,Your analogy with Car seat and Apple phones are dubious imo The fundamental question here is how the Insurance company makes the payout. Most insurance companies invest in interest bearing instruments. So the payout received by the family is the fruit of interest. Doesn't this make it Haram? I mean, are we not prohibited from receiving bank interest? So it may follow that the proceeds of LI are also prohibited. Happy to be corrected.
Happy to be corrected here too. With regards to the car seat analogy, I understand it as the car seat is a reduction of a negative effect e.g. being flown away when an accident happens. Similarly, LI is a reduction of negative outcome of the family having to beg when their sole-breadwinner dies. At least they can use the money to cover their monthly expenses (not excessive), while mourning and trying to recover from the situation such having another breadwinner. With regard to the payout of LI being as haram as bank interest since investing the money to interest-bearing financial instruments, LI is more of a service fulfilment such as protection. So, since this is a sale of service, how the seller earns their money should not be our concern. Banks on the other hand, we are using their service to keep and take care of our money and be the medium to transfer funds to other people or businesses. However, ironically, we pay them no fees, rather they pay us rewards such as bank interest. If they claim it to be a gift, some view it as it’s find, but naturally, they are sharing the fruits of their interest-bearing investments with their customers, so we shall reject.
I found you when I needed this knowledge! Jazakallahu Khayran 😊. I am starting a term life insurance. May Allah protect us all in the best way!
Thanks you for bringing some practical sense to this topic with evidence. Most scholars just quote that it deals with Riba and is like gambling so it’s Haram 🙄. Love the car seat analogy 😱
I’m in the Financial Service field. We educate families on buying Term Insurance and investing the difference. When I sit down with the Muslim community, they are hesitant on applying for the insurance, but when someone in their household Dies, you’ll see a GOFUND ME account set up, begging people to help with the funeral costs and their family left behind. Thank you brother for clarifying this.
May I kindly ask what funeral costs you're referring to?
Jazzak Allahu Khairan brother! Ive been avoiding Insurance ever since Ive read about an article that suggested that it was like gambling in that there is a winner / loser in that transaction. Also that that it presupposes the existence of uncertainty and how that uncertainty can be seen as gambling. I will only comment though on the comparison with the Child seat. The Child seat being a device that protects your child from injury/death, whereas the insurance doesnt do the same thing- it does though secure your family financially in the event of the principal's death- that is through a legally binding promise from the insurance firm-- Which up until this point i found hard to visualize as a product/service until you explained it clearly. Than you again.
Buy term and invest the difference .
We must understand this , so many Muslims say haram and leave nothing to their family.
I’ve helped families for years protect their income . Thank you for your information. Salaam Alaikum
Salam brother do you sale life insurance?
Yes, exactly buy term and invest the rest. This video is terrific, jazak Allah khair
This is the most thorough explanation I’ve seen so far. Not only does it explain all the ways it is Halal but it also provides an honest description between Whole life insurance and term insurance.
Jazakallahu Khairan.. This video has really prevented me from turning back on the life insurance policy that I subscribed to.
Great!
This was the first time that I heard about the idea of term life from a Muslim. Thank you for your explanation.
This is a terrific video. I am a financial coach who teaches people to never buy permanent life insurance and only to buy term. This video will help me lead many of my islamic friends to making a wise decision for their families!
What about health insurance?
Jazak ALLAH... Solid arguments in the face of illiteracy of common public
Just one side point regarding insurance, inheritance& murder: in Islam: the murderer looses right to inherit. I think same applies in insurance.
Salaam alikoum brother, thank you very much you made it easy and clear ,hamdou li Allah,may Allah protect you
Lol You’re sooo funny I love what you have explained in this video... this information is so accurate!! I know cause I am a financial advisor
So many Muslim sheiks speak Nice honey 🍯 words for a perfect world and perfect ummah. But when you are crippled, broke, divorced, or widowed, you will see other Muslims turning their faces and backs to you when you have your hand out! They will not be clamoring to provide you and yours maintenance or long term care. They will tell you to go away and ask Allah (swt). 😮. They will not be adopting your orphaned children either. They will send them to the orphanage. How difficult is it in Islamic countries to marry if one is an orphan?!?! They will then say orphans should marry orphans 😂. Many cultures of Muslim people are messed up & backwards. They like to pretend that racism doesn’t exist in Muslim communities also. Let’s start getting real and being progressive in this deen
Thanks for clarifying appreciate your efforts for making this video Jazakallah khair 🌹
Very nice, video. May Allah reward you the best
In permanent life insurance iul and Ul the cash component you acquire is given to your beneficiaries. It is not charged an interest. It builds on interest. You also do not lose money either. It grows at a cap of 9-15%. If the stock market goes up 20% for example and your cap is 10% you get 10% and the company gets 10% if the stock market goes down 20% you neither lose nor gain. There is no risk, no gamble. Insurance is what backs up our economy system.
Assalamualikum sir. Thanks for sharing knowledge.. please explain about health insurance also
JAK for clarifying the issue here. Any Term Life Insurance company you do recommend?
Jzk khair bro.
Jazak-Allah Khair for the clarification!
Salam. Is VUL or Variable Universal Life insurance (insurance with investment) considered a term insurance? May I know your stand if this is haram or halal?
@practical islamic finance:
Jazakallahu khaira for your enlightening insights!
Brother, I've a question, please clarify me.
Here in India, we have one subdivision in term insurance named return of premium.
It costs bit more than pure term plan. Th benefit over the later is in return of premium term insurance, if we survive on termination of our term, they will pay back what we have paid at that point of time.
So, will this be considered as loss includes interest?
Kindly provide your valuable guidance!
Regards,
Rameez Raja
The car seat example is off. The car seat actually prevents the child from possible major injuries same as the seat belt! However the life insurance doesn't protect you from anything you only recieve money in return for death. Iife insurance is more like registering a price on all passengers in your car if they get injured or die due to an accident. So you get an amount of money in return for death or injury rather than an added preventative feature against injuries
It provides the family of the bread winner financial protection in case they lose the breadwinner. Just as the car seat protects in case of a crash.
@@practicalislamicfinance still your comparison is off and misleading ! You can't compare a preventative measure to compensatory measures . A car seat is ment to reduce or prevent injury and will benefit even without an accident occuring since a child uses it for sitting . Comparing to receiving money after death is completely wrong. One is preventative and the other is merely compensatory!
Life insurance is more like you pay us incase you die we pay your family Ransom that's it. how could you go ahead and use the car seat logic here ?! There is no added preventative or safety measure here to protect you financially NOW . Both families are at same risk if they go bankrupt before death of the "breadwinner ". Actually the family with no life insurance would have more cash in hand since the didn't spend it on the monthly payments
THE LEVANT بلاد الشام life insurance is meant to prevent financial devastation of the family of the deceased or at least soften the financial blow. Also please calm down I’m trying to have a rational discussion.
THE LEVANT بلاد الشام what about in case of death which family is better off all else equal? The family whose breadwinner had life insurance or the one without?
Hi, what's your take on Lemonade insurance stock?
very well thought out. thanks for sharing
Glad you liked it!
Is retirement insurance considered permanent life insurance.? Paying monthly premium to get paid out at retirement? Thank you for sharing this video.
I get that the cash accumulation component is Haram, but you're grossly misunderstood of the access and benefits for permanent life insurance. I am not here to convince you to get permanent life insurance, because of the haram component. However, you're completely wrong about how the cash access works for permanent policies... I'll pray for you and for everyone believing the misinformation. That being said, term insurance is great for anyone that doesn't have insurance. Life insurance in its purest form is buying money at a discount, and term insurance with living benefits is a great way to protect your family, assets, and loss of income. On a personal level, I like permanent life insurance, but also like having terms to supplement the death benefit need. For those that need to purchase life insurance and adhere to halal/haram principles, I feel the growth of the cash value would be the ONLY reason you wouldn't get a permanent policy. So that being said, if anyone needs a term policy, feel free to hit me up :) I am happy to assist in protecting your family in the event of a death in the family.
Yea he should have just stuck to speaking about term because he doesn't have an ounce of understanding about whole life.
I'm surprised that Muslims aren't opposed to term as well because all you have to do is a quick search and find that only 2% of them pay out so wouldn't that mean you're gambling 98% of the time.
A whole life insurance contract is a legal document with guarantees and it can be fully paid up in a single premium 5 years or 10.
Not to mention the gross misrepresentation of the cost. In mutually owned insurance contracts it's possible to structure the policy as a 90/10 which 90% goes towards the cash value and 10% goes towards the base premium.
Its weird to see people saying buy term and invest the difference but calling Whole Life Insurance gambling. This is definitely the twilight zone. Between corporate buy backs and false over evaluation in the market it's legalized gambling.
The value is zero before he dies , thats the whole deal. They only benefit if and when he dies , before death there is no benefit. For example, both the insured and uninsured could go through a financial crisis and loss all their wealth , they would both be in the same financial situation. Regardless of life insurance! I don't see how the insured benefits while alive , I see how it adds benefit after his death only !
It's not aqd e tijari ...
not a business agreement... to see profit and loss..it's not a gambling business...
It's purely Risk management for certain period, it's simply a aqd e tawooni,
It's not a agreement of loan...
It's not a agreement of currency exchange to one can think about profit and loss
I like the car-seat analogy!
me too. the guy in the video seems super smart ;)
clearly explained
I have a question if a person paid a premium for 10 years and it is a whole amount paid was 50 thousand and he died and the company pays 250k, then they are paying him 200 K more than what he paid. Isn't this like gambling? isn't it like winning lottery?
Participating whole life does not encourage interest, and I can show you mathematically how using your policies growing cash value to buy Other assets is much wiser then buy term invest the difference.
Yeah no
Brother I have an investment question. Is investing in leveraged ETFs halal in Islam? If your answer is no because they use leverage then why is it halal to invest in stocks of a company which have taken a bank loan? As leverage and bank loans are both haram in Islam because of Riba
I wonder how a scholar can think, "when you die you win"
No you lose!, you lose everything here.
If insurance are halal doesn't it imply to derivatives trading especially options cz in it's broad sense options are quite similar to insurance and most ulama consider it haram due to gharar and maysir wheres of we see the exchang mitigates the gharar of contract ratification and proper analysis and strategies take out the point of maysir and the only uncertainty left is the price and volatility of the underlying asset. Also options are not always a zero sum game.
11:07 - Riba, Maysin, Gharar
Qubit life halal or haram. Please someone give answer
Thanks
Salam o alaikom brother.
I am thinking about buying Roth IRA. I did so many researches to find out if it is Haram or Halal? But count not find anything.
Can you please talk about it?
Jazakal Allah khairan
A Roth IRA is a vehicle to invest into something. Vehicles are not haraam by nature. What you choose to invest inside your Roth IRA account must be vetted. For example, if you deposit $6,000 into your Roth IRA, either you or your financial institution now has to purchase stocks using that money. Ensure that the stocks purchased are halaal.
I would like you to respond to this question please!!! My organization provides life insurance to every employee, and its not employee's choice to take it or leave it, every employee has to have it and also employee is not paying for this insurance premium, the company is doing that for him over and above his salary, and in case of death, the employee's beneficiary will get a certain number of salaries. whats the ruling on this sort of insurance?
Seems like a win for employees. Don’t see anything wrong in it.
Hi, need your advice In this. I just stupidly bought somewhat like a whole life insurance policy, except that it's tied with invesment. So an investment linked with insurance where certain amt of my premium is paid to insurance another to etfs, bonds etc. Im considering of bailing it totally since I started it a few months go, I would lose a few thousand dollars alr 😭 but just needed a second opinion if I were to keep this, there is still the element of interest in it no matter how much of the premiums go to investment am I correct? I don't want to use smth which obviously incurs high amt of riba. Ur reply is greatly appreciated!
im a life insurance agent and it sounds like you have a universal policy. Best advice. CANCEL IT NOWW!!!!
@@yehyaaltamimi6361 can you recommend a short term life insurance that halal
What about accidental death covers which we get as complimentary from bank while holding a debit card or credit card? i have 7000$ accidental death cover on debit card and 70000$ on credit card. will it be haram if my family claim that amount after my death?
you can channel to baitulmal
The problem is the lack of transparency payout of the conventional insurance, be it term or whole life. When you pay the premium, the insurance company will use that money to invest. What the insurance company invest in, is unknown, which can be gharar. They could have invested in bonds which deals with riba or haram activity equity company. This is the ethical problem. The Muslim leaders should have come out with a halal solution. Allah has mentioned in the Quran, for every problem, there is a solution. Can we die in peace knowing that our beneficiaries are receiving money from haram sources. Each to his own.
Yes but the real problem is the gambling based nature of commercial insurance
What if i die a week after term insurance is over? Can the person still get money somehow? Thanks
No
Lol! Even u die 1min after expiry, insurance co dancing the kosher
Yeah then I’d rather have a full life one
Assalamu alaikum, thank you for shedding light on this matter. In your opinion why have most fiqh councils leaned on the prohibition opinion regarding life insurance?
If I’m not mistaken, late Sh Mustafa Az-Zarqa (rh) opined that life insurance is permissible if the premiums are invested in stocks that aren’t haram.
You describe term life insurance like a sale where you pay for a ‘legally binding promise’ of financial security. That’s the product if you like. If it’s a sale, then why are you getting your premiums back with compounded interest (I’m unsure whether this surplus is in essence Riba). If you hold it’s not riba, it’s profit from investment...then its closer to an investment, if not actually is an investment. And so the point of which avenues your investment is being used in, surely stands ? I’d be interested to hear from you. Salam :)
What if my non Muslim uncle is paying the life insurance? I'm assuming I shouldn't accept the money as it's haram?
It’s not Haram to inherit from a non Muslim
@@practicalislamicfinance thank you for response. I should say that my uncle is paying for my life insurance policy for my children to inherit. Sorry for confusion. I'm assuming as a Muslim this isn't permissible but I could be wrong.
Great video. What about a variable permanent policy? Is that the same as whole life insurance?
Assalamu alaykum. I'd kindly like to ask a few questions on this please. I have learnt a quite bit from you already alhamdulillah, but now on this issue I have a few concerns.
Firstly, how does the family (i.e. beneficiaries of the policy) spend or allocate the money among themselves?
والله this is very misleading. There is no mention of why the consensus of scholars say that life insurance (all insurance outside of necessity) is prohibited. It doesn’t tackle any of the reasons why fiqh scholars say it is impermissible. & the explanation of gharar was missing the point in which most scholars argue life insurance is impermissible, which is you can pay for something & get no benefit in return or you can pay very little & be given a huge reward. The likelihood of there being someone who loses (from a financial standpoint) is very likely & almost always the case. Also, if you’re profiting off of investments, you must know that you’re money is only invested towards that which is halal. Just like we can’t sell spirits, we can’t invest in them either. This video concerns me so much because just like Islamic financial institutions (not all, but some) it preys on the ignorance of people not being able to question or push back on claims & statements because they know very little about the fiqh of business transactions. Islam discusses concepts clearly, so change the name all you want, if it fits into certain boxes, it takes the same ruling regardless what you label it. I ask Allah to grant us sincerity & honesty. Posts like this scare me very much because it doesn’t even take into consideration how we’re supposed to respect our scholars & how they came to the conclusion that insurance is haram by default & it ignores how we reach rulings in islam (Quran, Sunnah, Ijma’, Qiyas, etc). Among other things. والله المستعان
Watch my video on insurance broadly
Thanks for waking me up…jazakALLAH
This isn’t accurate about permanent life insurance
Where is Universal life Insurance?
Assalamu alaikum . Is it advisable to take medical insurance ?
Great info, albeit too late for me!! May Allah forgive me!!
Thts the case fr many people akhi, dont regret over it, I hv got clarity on this topic only after spending a quarter of my wealth on medical expenses which is sad but true 🙂🙂
All the viewers plz consult to some mufti of Islam
Mifti with financial knowledge
Informative! How can I buy a house 🏠 Islam without falling into interest. Is there Muslims own financial institutions that can facilitate my needs. I live in Canada
Lol a whole life policy is something you are going to regret your whole life Lollol total agree
Assalamualaikum brother thanks for your video. I am totally disagree with you on term or permanent Life. Everybody talking about wholelife but they have no idea about IUL(index universal life).And you said term cheaper absolutely wrong.See the real number.
A 30 years old man will get a 250K term for 30 years will pay 230 per year so Total 230*30=6900 Nothing happen so he will renew it now at age 60. A 60 years old man will buy a 25 years term that's the max age they will allow so 60 years old man will pay $2392 per year so for 25 years he paid 2392*25=$59800. So total at age 85 he paid $6900+$59800=$66700 for 250K coverage.
Now In IUL(index universal Life) 30 years old man will pay $108 monthly $1293 yearly so at age 85 he paid total $71,082 for 250K death benefit. And He got $225,578 cash value which he can access anytime tax free.And if he don't withdraw the money it will be added with death benefit so he got $475,578 in death benefit.If he withdraw the cash value still he left $250K for the family.At age 88 cash value $231,932 and death value $479,483.
After age 88 cash value will decrease slowly for cost of insurance.
So which one is expensive.
A little bit about IUL.We can design the product as tax free retirement supplement where i have to over fund the policy and 90% of death benefit I can access tax free. Or we can add Long term care as a rider in case we become disable it will pay 2% of death benefit every month to the service provider.Average cost of nursing home is now $83K per year think about after 30 year.
Does it has Gharar?. Its clear in the contract It has a floor .75% and a cap 15% depends on company.interest is not fixed .It will show in illustration the possible outcome.Guaranteed death value with non guaranteed cash value which depends on market.money is not directly invested it stock market.
And about term I know about a mother who is 79 next year 1 mil policy will expire she was telling I wish I die next year my kids will get the 1 Mil.Is it ok in islam.Her entire life she paid premium and got nothing but peace of mind.
But its ok for someone who don't have the money definitely I will recommend term something is better than nothing.But try to get the permanent one later on.Because the moment you need the coverage more you are not even insurable.
Walaykum Salam brother, my apologies for the late reply.
1. A 30-year-old man may need life insurance but it's far less likely that a 60-year-old man will. Life insurance is meant to be used as a tool to take care of your family in case you pass unexpectedly while you still have dependents. Hopefully, when someone reaches 60 years of age, their children are self-sufficient and they have enough savings and retirement investments to sustain their wife in case they pass. After all, they only have an average of 5 years left in their work-life anyway. So they likely won't need life insurance. That's the first point your calculation gets wrong.
2. As for the other person that took out the permanent life insurance, approximately 26% of whole life insurance policies are surrendered within the first three years because they can't keep up with the large premium payments and 45% are surrendered within the first ten years. A very small minority of permanent life insurance policies holders don't eventually let their policies lapse because they can't keep up with its high payments. So it's more likely than not that permanent life customers will surrender their policies before their death after having paid more than 10 times what they needed to in the meantime.
Not to mention the extremely poor returns these permanent life insurance policies typically have for the cash value (around 2-3% which is horrendous and primarily comes for interest-based products which are haram).
Alternatively, the permanent life customer in your example could have taken out a term life insurance policy and invested the difference in a well-diversified halal portfolio which would have historically earned 8-9% annually and they would have free access to it penalty-free and wouldn't have to borrow against it or any of the other shenanigans that permanent life insurance companies pull on their customers.
No matter how you slice it, permanent life insurance is a huge ripoff, 10 times the cost for the same death benefit. Get Term life insurance and invest the difference. No matter how you slice it, it's the more prudent choice. WsSalam.
Thank you brother for your reply. I am not talking about whole life which has very poor return and they don't give cash value to client.I am talking about IUL which is also a permanent life insurance which has great return and it has a investment option too. Is it permissible in islam.I agree it's expensive .But if some one can afford it because they are saving money as cash value for retirement and having protection for the family same time.
@@sirajummunira8599 You are both overlooking another permanent policy, and whole life policies sold by mutual companies. I have an Endowment at Age 68 from a mutual, and 1. The cash values grow faster than whole life which assumes death at age 100 and pays whatever cash value then.
2. As a mutual company it pays dividends (profits, not interest) annually. Options for the dividends are a) cash b) leave in at interest c) paid up additional insurance.
3. with PUAs, the face value increases annually for the beneficiaries, AND their cash values are added to the base policy's cash values.that the owner can cash out or borrow. Any loan is deducted from the payout on death or at the endowment age, if not repaid of course.
4. The endowment can be taken as lump sum and invested elsewhere.
5. The portion of the payout that is the return of premium is not taxable (having already been taxed), only the amount over total premiums paid is taxable.
5. The payout options at the Endowment age for the insured include lifetime income (terrible if you die 1 year after starting payments), Lifetime Income 10 Years Certain, 20 Years Certain, etc. That means if you die within the 10 years, your beneficiaries receive the remainder that would be paid, if you live 30 years, you get all of the policy's vale in the first 10, and the insurance company's money in the remaining 20 at the same amount per year. That's ok because you stopped earning dividends on the principal when the payout period began.
I actually have a small one of these (so the premiums would be low and affordable quarterly or semi-annually, not monthly and thus able to hang on to in the worst of tough times), kept for 38 years. The total premiums paid will be 73% of the original Face Value, but only 28% of the endowment benefit, because of the cash values of the PUAs.
Now, if I outlive the 10 year certain period, which I am statistically likely to do by 12 years, the premiums paid will be 13% of the amount I receive.
Sure, there are other investments that pay more, but they are nowhere near as secure or predictable, require much more management, and do not have the added value of the death benefit that continued to grow and protected my beneficiaries all of these years. It was a form of enforced savings plan for retirement with after-tax dollars, too. Given the number of times people's 401Ks and IRAs and home values have tanked, or job loss with loss of company term insurance wiping out their savings, having something like this, even a small one, can mean a lot to you, not just your beneficiaries.
Is working in Insurance company halal?
🎉Thank you Brother.
😮😢 What person wants to die & leave their spouse destitute?! People won’t take care of them. Don’t leave your spouse & kids to the mercy of people!!! An aged spouse or disabled child can’t fully provide for themselves. It would be heartless to hurt your family like that.
I disagree
SubhanAllaah wal Hamdulillaah!!!
This is SoO sad, you should Fear Allaah!!!
Shame on you as you are calling the Muslims to the Disobedience of Allaah and His Messenger (sallallaahu alaihi wa sallam!)
Most sources say life insurance is Haram.
With respect,Your analogy with Car seat and Apple phones are dubious imo
The fundamental question here is how the Insurance company makes the payout. Most insurance companies invest in interest bearing instruments.
So the payout received by the family is the fruit of interest.
Doesn't this make it Haram?
I mean, are we not prohibited from receiving bank interest?
So it may follow that the proceeds of LI are also prohibited.
Happy to be corrected.
Happy to be corrected here too. With regards to the car seat analogy, I understand it as the car seat is a reduction of a negative effect e.g. being flown away when an accident happens. Similarly, LI is a reduction of negative outcome of the family having to beg when their sole-breadwinner dies. At least they can use the money to cover their monthly expenses (not excessive), while mourning and trying to recover from the situation such having another breadwinner.
With regard to the payout of LI being as haram as bank interest since investing the money to interest-bearing financial instruments, LI is more of a service fulfilment such as protection. So, since this is a sale of service, how the seller earns their money should not be our concern. Banks on the other hand, we are using their service to keep and take care of our money and be the medium to transfer funds to other people or businesses. However, ironically, we pay them no fees, rather they pay us rewards such as bank interest. If they claim it to be a gift, some view it as it’s find, but naturally, they are sharing the fruits of their interest-bearing investments with their customers, so we shall reject.