Can I have disability or life insurance?
Question:
Are Muslims allowed to have disability or term life insurance in non-Muslim countries like Canada, where there are no well-recognized alternatives like takaful, and families might suffer without such support?
Short Answer:
No, it is not allowed to take life insurance—including term life insurance—according to the consensus (ijmāʿ) of the four madhāhib and the contemporary Islamic legal councils worldwide. This is because life insurance involves elements that are prohibited in Islam, such as:
- Gharar (excessive uncertainty)
- Maysir (gambling)
- Riba (interest)
And necessity (darurah) is not recognized in this case, because life insurance does not deal with an immediate, unavoidable, or present danger—it is about a future possibility, and Islam does not allow using forbidden contracts to plan for something that might or might not happen.
What Have the Scholars and Councils Said?
- The Islamic Fiqh Academy of the OIC (Majmaʿ al-Fiqh al-Islāmī) has clearly ruled that life insurance is haram, because of its commercial structure, its dependence on gharar, and its contradiction with Islamic financial ethics.
- The Islamic Fiqh Council of Makkah and Al-Azhar scholars have also issued unanimous statements that life insurance is not permissible, regardless of whether it’s whole life or term life insurance.
- The Assembly of Muslim Jurists of America (AMJA) and other councils in Europe and South Africa do not make exceptions for life insurance, even for minorities in non-Muslim countries. They allow only certain types of insurance that are mandatory (like car insurance) or linked to an actual, immediate need (like health or home insurance).
What About Disability Insurance?
Disability insurance has been treated differently by some scholars:
- If it is directly linked to employment, or is part of a government or workplace system, and not a voluntary, private contract, then many scholars have permitted it.
- However, if it’s a private, commercial disability insurance contract, it also includes the same prohibited elements as life insurance, and therefore, it is not permissible.
So the ruling depends on the type and structure of the disability insurance.
What If There’s No Takaful?
Even if takaful isn’t available, it doesn’t change the ruling. Islam doesn’t allow us to use haram contracts just because a halal one is missing—unless the situation is a true necessity, meaning:
- Immediate and certain harm
- No lawful alternative
- The forbidden action is the only way to prevent the harm
And in the case of life insurance, none of those conditions are met.
Final Ruling:
- Life insurance is not allowed in Islam—by consensus of all four madhāhib and Islamic councils.
- It’s not a necessity, and there’s no exception, even for Muslims living in the West.
- Disability insurance may be allowed only if it’s part of employment or public systems, but not as a private, commercial contract.
And Allah knows best.