Islamic Finance Prohibits Interest and Conventional Insurance

At my age of 33, a one million dollar life insurance policy is just $70 a month (20 year term). After 20 years, it would probably be around $300 a month for the next 20 years after that.

So here’s a question. Why wouldn’t I want to do this for my family? Being the primary breadwinner, if I died, it would be a major disaster to my wife and kids. They would have to scramble to find an alternate source of income to pay the bills while having to cope with the loss of their spouse / father.

All these years, I never got life insurance. Infact I told my wife if I ever die, don’t use the life insurance that my company gives you (probably $50k-100k) because its haram. Instead figure out another way to survive

Does this make sense?

I also remember the story of a Somali family in Waterloo that their house burned down, and they had no insurance. SubhanAllah! They were outside the masjid begging for money as they had a big family and no house now (or at least a damaged house).

Why would we want to go through this?

I even remember a Muslim brother who was in Hizbut Tahrir who decided to drive illegally without auto insurance because it was haram.. What a risk he was taking.. Imagine he killed someone?  Infact he actually got into a car accident and somehow managed to hurriedly get car insurance to get out of this mess.

If someone wants to tell me insurance is gambling, I would say that is silly. The reason the bank can afford to give me a 1million dollar policy for just $70 a month is because in all likelihood, I will not die in the next 20 years. It’s based on the math. It works out well for both the buyer and the insurer.   

Does this rule improve the lives of Muslims? I don’t think so.