Question:

I wanted to inquire about the Islamic point of view on insurance sales. 

I recently immigrated to Canada, after 6 months I got an opportunity to interview with a company called ABC Life Insurance. After passing 3 exams I am now a licensed insurance advisor selling accident and sickness insurance for self-employed and/or small business owners. My duties are to visit clients, inform them of our insurance options and policies and make sales. 

a)      My first question is if this is a permissible job in the Islamic view point.

b)      My second question is if the purchase of accident/sickness and/or disability insurance is permissible in Islam? 

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

a)      In principle all conventional insurance policies are at its core designed around interest and ribaa. Technically theses insurance policies have the elements of ribaa’ and qimar (gambling) in then, both of which are expressly prohibited in Shari‘ah. This renders all these conventional policies impermissible and haram. By selling these policies, a sales agent becomes a direct assistant towards sale and propagation of haram policy. Allah Ta'ala says in this regard,

وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَى وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ (المائدة: 2)

"Assist one another is righteousness and piety, and do not assist in sin and rancour." (Quran 5:2)

The curse of usury and interest is well known to the ummah of Rasululla salallahu alayhi wasallam. Hence, there is not much need for explanation in it. It will be impermissible for one to become an insurance agent.

b)      The second part of your question deals with benefiting or using these conventional insurances. There is a little detail in this matter.

Certain types of insurances are made compulsory under the law of the land. Hence avoidance of these would incur legal litigation against one self. Shariah recognizes this as a valid excuse and give permissibility of taking out such insurance. (Fatawa Mahmudiyyah 16/381)

This is not the case with other third party insurances which are voluntary action of a person. Hence these will not be permissible until and unless some other factor or excuse develops.

There is one final discussion under this chapter which revolves around choosing either the government based insurance or a third-party insurance policy. Sometimes a government obliges one to take out certain insurance without restricting this insurance to a particular government policy. In such cases if the individual takes out a third party insurance, then too he will be relieved from the obligation.

Since every payment, in forms of premiums, one makes towards the policy is a payment into a haram transaction, the ideal would be to find minimize these payment. This factor coupled with the above dispensation from the government towards taking a third party insurance offers an opportunity for an individual to opt for the policy which has a lower premium payment.

If such an opportunity is available, then it will be binding to opt for the lower premium payments regardless of the payout of the insurance scheme. 

And Allah Ta’āla Knows Best
Mufti Faisal bin Abdul Hameed al-Mahmudi
www.fatwa.ca 

Checked and concurred by,
Mufti Faraz al-Mahmudi
www.darulfiqh.com