Islamic Financial Guidance
Mufti Abu Muhammad Ali Asghar Attari Madani
1. Insurance
Q: What do the noble scholars say about the following matter:
Is it permissible to take out insurance policies such as life insurance?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: It is unlawful in Islam and a sin to take out any type of insurance policy, including life insurance.
Life insurance involves interest-based lending (ribā), because the money paid to the insurance provider is a loan which the provider pays back with an additional amount at a later stage. The additional amount is considered interest, as any benefit accrued from a loan is deemed interest in the hadith. Interest is unlawful and a severe sin.
General insurance entails gambling because one’s money is placed at risk; if an accident occurs, the company will bear the loss and one will receive more than he deposited, and if no accident occurs, one will not have the money he deposited returned to him. This is gambling, and it is a definitively prohibited act and a major sin in light of the noble Quran and Sunnah.
Declaring the prohibition of interest, Allah states:
واَحَلَّ اللّٰہُ الۡبَیۡعَ وَ حَرَّمَ الرِّبٰوا ؕ
Translation from Kanz al-Īmān: And Allah has made trading lawful and has made usury unlawful. [1]
A hadith reads:
کُلُّ قَرْضٍ جَرَّ مَنْفَعَۃً فَھُوَ رِبًا
“Every loan which brings about benefit is usury.”[2]
Concerning gambling, Allah Almighty declares:
یٰۤاَیُّہَا الَّذِیۡنَ اٰمَنُوۡۤا اِنَّمَا الۡخَمۡرُ وَ الۡمَیۡسِرُ وَ الۡاَنۡصَابُ وَ الۡاَزۡلَامُ رِجۡسٌ مِّنۡ عَمَلِ الشَّیۡطٰنِ فَاجۡتَنِبُوۡہُ لَعَلَّکُمۡ تُفۡلِحُوۡنَ (۹۰)
Translation from Kanz al-Īmān: O believers! Wine, and gambling, and idols, and fortune-telling arrows (to ascertain luck or predict future events) are but impure; the works of the Devil. Therefore, keep avoiding them in order that you may attain success. [3]
Imam Ahmad Raza Khan رَحْمَةُ الـلّٰـهِ عَلَيْه explains, “Both (interest and gambling) are forbidden and major sins.”[4]
In summary, taking out insurance is unlawful in Islamic law. If someone has already done so, they must terminate the agreement and repent to Allah Almighty. Furthermore, the policy holder can only withdraw whatever he has deposited into the policy; it is impermissible to take any additional amount.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
2. Increased fees for urgent work
Q: What do the noble scholars say concerning the following matter:
I work as a tailor, and sometimes a customer asks for clothes to be tailored on an urgent basis. The normal rate for tailoring a pair of clothes is generally 1200 rupees. If I agree 2,000 rupees with the customer for urgent tailoring, will the extra amount be permissible for me?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: According to Islamic law, the one who works on the basis of a fee has a right to demand whatever fee he wishes for his work when he makes an agreement with the customer. This is a matter to be decided by the contracting parties. The only exception is brokerage, whereby there is a restriction of charging a fee in line with the going rate.
With regards to the scenario mentioned in the question, if we look at our society, there are many places where additional fees are taken for procuring urgent work. For example, if a standard passport is required, the fees are less, but if an urgent passport is demanded, the fees stipulated are more. Similarly, a laundryman charges more for urgent washing of clothes.
Therefore, it is prevalent within our society that extra fees are charged for urgent work. Subsequently, there is no problem if you also agree more fees with the customer for urgent tailoring, up to a reasonable limit. The restriction of ‘reasonable’ has been placed here as making ease for people is an act of virtuosity.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
3. Rent for a stall outside one’s shop
Q: What do the noble scholars say about the following matter:
A person wants to set up a cabin on the road in front of my shop. In exchange, he will pay me rent on a monthly basis. Is this permissible?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: The road is not part of your personal property but a public pathway. According to government ordinances, it is unlawful to set up a cabin there. Doing so is harmful for the public, as the public pathway becomes restricted for those using it. Therefore, there cannot be permission for this at all.
Hypothetically, if there were such a scenario which was not illegal and did not cause inconvenience and harm to people, even then the place is not in your ownership, so you would not be able to take rent for that place. However, in this scenario you could place your own empty cabin there, or if a stall is to be mounted on a platform, you could place a platform there and take rent for the cabin or the platform.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
4. Purchasing or selling a flat or shop before its construction
Q: What do the noble scholars say about the following matter:
1. Is it permissible to buy or sell a flat or shop before its construction. Normally, bookings are taken in advance and construction takes place later.
2. Can the person who has booked such a flat sell it on before taking possession of it?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A:
1. Generally, the asset or commodity being sold must physically exist at the time of sale. However, there are two exceptions:
1. Forward contracts (bayꜤ al-salam) where the price for an asset is paid upfront at the time of the contract for the asset or commodity to be delivered later.
2. Manufacturing contracts (istiṣnāꜤ) whereby an asset is prepared on order. At the time of the contract, the asset does not exist.
The scenario described in the question is that of a manufacturing contract, therefore the existence of the flats at the time of the contract is not necessary. Consequently, offering and accepting a booking for flats before they are constructed is permissible.
2. The Islamic Research Board (Majlis Taḥqiqat Shar’iyyah), which is the research board of Dar al-Ifta Ahl al-Sunnah, has concluded that the person who has booked a flat can relinquish his right and sell the flat on before possessing it, and its profit will be lawful. The detailed legal edict concerning this subject can be viewed on the website of Dar al-Ifta Ahl al-Sunnah: www.daruliftaahlesunnat.net
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
Comments