This is a complete Islamic guide on is working in insurance and selling insurance haram or halal. Whether you’re looking to work in an insurance company and selling life, car, health, house, travel or even phone insurance. This guide has all the answers.
All evidence is from the Qur’an and authentic (sahih) hadith from the Sunnah.
Bismillah…
Is Working in Insurance and Selling Insurance Haram? (Life, Car, Home, Health, Medical, Travel, Phone)
Working in a conventional insurance company is haram in Islam. Whether that be to sell life insurance, car insurance, home, travel or even health and medical insurance. This is because insurance companies make money from interest/usury (Riba) and other haram activities such as gharar and maysir.
Working as part of an insurance company you may have to sell or have a part in selling haram contracts/policies to your clients. Since the income generated by insurance companies is haram. Islamic scholars have given the fatwa that your employment salary will be coming from haram income. So your income will NOT be halal.
This includes:
- Working as an underwriter for an insurance company.
- Selling insurance contracts as a sales person (e.g. car insurance, life, health, house, phone or travel insurance)
- Being a witness or providing assistance or guidance to insurance contracts despite not selling the contracts yourself.
- Being an insurance agent for contracts such as life, health or property insurance.
- Investing in insurance companies.
- Working for a loan company, credit card firm or working in conventional banks.
All these companies and jobs directly or indirectly operate with interest (riba) and benefiting or selling riba is haram in Islam. And so all four schools of thought consider selling conventional insurance to be harām in Islam. Hanafi, Shafi’i, Maliki and Hanbali all state it is not permissible for a Muslim to help or support someone in sin.
Why is it Haram to Sell Insurance & Work in Insurance Companies? (Life, Car, Home, Health, Medical, Travel, Phone)
Selling insurance and working for insurance companies is haram in Islam because insurance companies deal with haram. Such as Interest (Riba), gambling (Qimar) and uncertainty (Gharar). And in Islam it is prohibited to sell and make money from selling haram.
The evidence of this is found in the authentic hadith of the Prophet (peace be upon him). Where we learn that if Allah has made something something haram then selling it is also haram. So because insurance is haram, selling insurance is also haram.
Narrated Ibn ‘Abbas reported that the Messenger of Allah (peace be upon him) said:
“When Allah declares something forbidden for the people, He declares its price (i.e. selling) also forbidden (haram) for them.”
[Sunan Abi Dawud • Book 24, Hadith 73 • Graded Authentic (Sahih)]
In Islam dealing with interest/usury is forbidden and considered a major sin. Any transaction where you give money and expect money back with an increase is riba. And insurance companies deal heavily with interest/usury. Which does not conform with sharia-law and therefore is not allowed.
Some of the way insurance companies deal with riba (interest/usury) are:
The policyholder pays the insurance company a monthly premium. And expects a guaranteed return of money with an increase if a calamity strikes and they make an insurance claim.
Insurance companies also invest their customer’s money in interest-based banking and haram companies in the stock market. This is to cover their losses and make larger profits. For more details on how insurance companies make money click here.
In the Qur’an, Allah strictly prohibits dealing with riba (interest/usury):
“Those who consume interest cannot stand (on the Day of Resurrection) except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is (just) like interest.” But Allah has permitted trade and has forbidden interest.
So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns (to dealing in interest or usury) – those are the companions of the Fire; they will abide eternally therein.” – [Qur’an 2:275]
If you work in an insurance company and sell insurance contracts then you will be selling contracts that contain riba (interest/usury). And in Islam it is a sin to help or support someone in sin or haram. So you cannot sell conventional health, home, car, phone or life insurance.
Allah commands us to cooperate with people in good work and prohibits us from helping others in sin or haram activity:
“Cooperate with one another in goodness and righteousness, and do not cooperate in sin and transgression. And be mindful of Allah. Surely Allah is severe in punishment.” – [Qur’an 5:2]
Working in Haram Company and having Haram Income
Working in haram company and having haram income your du’as (supplications) will not be answered. There will be no blessings or protection in your income and Allah may punish you for earning haram if He so wishes.
We learn this from the hadith of the Prophet (peace be upon him). Where he informs us of a man who is in desperate need of Allah. But the man is nourished by earning haram and so his supplication (dua) is not answered.
Abu Huraira reported Allah’s Messenger (peace be upon him) as saying:
“O people, Allah is Good and so He accepts only that which is good. And Allah commanded the believers as He commanded the Messengers by saying: “O Messengers, eat of the good (halal) things, and do good deeds. Verily I am aware of what you do”. – Quran [23:51]
And He said: “O those who believe, eat of the good (halal) things that We gave you” – [Qur’an 2:172]
He then made a mention of a person who travels widely. The person’s hair is disheveled and covered with dust (i.e. he is in a desperate situation and in need of Allah to answer his dua). He lifts his hand towards the sky (and thus makes the supplication): “O Lord, O Lord,”. Whereas his food is haram, his drink is haram, and his clothes are haram and his nourishment is haram (i.e. he earns through haram and that is what he is nourished and clothed with). The Prophet (peace be upon him) then remarked: “Then how can his supplication be accepted?“”
[Sahih Muslim • Book 12, Hadith 83 • Graded Authentic (Sahih)]
What do I do if I’m already working in a Haram Insurance Company?
As a general rule, if you are already working for an insurance company and do not have other means of income. Then you should seek a fatwa from a trusted scholar/mufti who can look into your particular case and give you guidance.
Everyone’s personal circumstances and job role is different. Some may have a higher degree of haram in their job where they are directly selling or being witness to haram insurance contracts.
Others may have some elements of haram but the bulk of their job is not necessarily haram. And so they may not have to quit straight away but actively look for another job.
The scholar will look into your individual circumstances. Then he will decide whether your job entails too many haram elements and whether you should repent to Allah and quit straight away.
Or that you are not required to quit immediately but you look for another job while still being in your current job. And give lots of charity to purify your wealth from any haram income while you actively look for another job.
When is Working in an Insurance Company Halal? (Life, Car, Home, Health, Medical, Travel, Phone)
Working in a conventional insurance company and selling insurance is NOT halal in Islam. But some scholars state that if your job does not directly entail selling or being witness to insurance contracts then your job in insurance companies may be halal.
For example if you are a janitor/cleaner in an insurance company this is permissible according to some scholars. This is because you are not directly selling or being a witness to insurance contracts yourself. Nor are you underwriting policies for haram health, life or car insurance policies.
How to Sell Insurance to a Muslim?
Conventional insurance is prohibited (haram) for Muslims. If you want to sell insurance to a Muslim then the insurance policy must be sharia-compliant. It must not contain interest/usury.
In Islam Muslims have a sharia-compliant policy known as Takaful. Takaful insurance policies provide insurance coverage which is permissible (halal) for Muslims . Whether that be for health, life or car insurance.
Takaful is an interest-free alternative to conventional insurance. It is a cooperative based insurance system where Muslims come together to contribute to a mutual fund. When somebody suffers a loss they can use the funds to help each other. You may sell a takaful insurance policy to a Muslim.
Conclusion
As a general rule, selling insurance and working in a conventional insurance companies is haram in Islam. A Muslim should refrain from working in insurance companies. Whether that be to sell life insurance, car, home, travel, phone or even health and medical insurance.
All evidence provided is from the Quran and authentic (sahih) hadith.
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And Allah the Most Knowledgeable knows best.