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Fatwa CenterWorking in insurance and pension planning
Question
I am a Muslim computer engineer and mostly dealing with software and hardware for a few months I have been involved in a German insurance company. I am dealing with secondary pension planning which after 65 0r 60 years depending to men or women will provide you a pension yearly depending upon how much years before you started to save this money with them and also the quantity of money you save every year.They also secure accidental death or even natural death to provide money to your wife or children also a small amount of money every day if you are sick and hospitalized to continue your family life with out financial problems. A few day ago I went to meet one of my friend who is a very good Muslim. She like this idea but she want some thing clear according to Shariah that this type of pension plan or insurance is allowed in Islam.This makes me also suspect as I am representing this type of plan onbehalf of this company. If it is illegal in Islam I am also doing wrong or I chose a wrong way of earning money for me and my family. I will be really thankful to you, if you clearly tell me with consulting with group of persons of Shariah about this job and pension or insurance policy.
Answer
Praise be to Allah, the Lord of the World; and blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
The contract mentioned in your question is not permissible. This contract is called compensation contract, which is known as life insurance. In such a contract the insuring company/party undertakes the responsibility of paying a certain amount agreed upon in advance, to the insured person or the one who is nominated by him, upon his death or when he reaches a certain age, etc. The insuring party is bound to pay the insured person against his monthly payments for a certain period.
This insurance is commercial, which is forbidden, in Islamic Shariah.
In fact, the basis of this contract is usury, gambling and also involves high risk. Such contracts are forbidden in Islamic Shariah. As long as this contract is forbidden working in such field is also forbidden since working there is a real cooperation in evil and transgression. Allah Says (interpretation of meaning): {….. but do not help one another in sin and transgression. ……}[5:2].
For more details, please refer to Fatwas:
81425, 81441 and 83084.
Allah knows best.
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