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The idea of having life insurance is not in opposition to Islamic law. In essence, this kind of insurance is comparable to the concepts of indemnification and communal accountability within the community. 

As everyone is required to insure one another against unforeseen future financial hazards. That would affect the financial condition of the participant’s families.

But in this article, we will see the perception of whole life insurance in Islam.

What is whole life insurance?

Whole life insurance is a type of life assurance since the payout to your heirs is assured. Your lifelong insurance policy will pay out upon your death. To maintain your coverage, you will need to make premium payments for the remainder of your life.

Because of this, getting insurance when you’re young might turn out to be an expensive decision. Your loved ones will get a payout if you die away while your insurance is still in effect. Uses for this payout include:

  • Pay down the outstanding mortgage amount.
  • Provide for the necessities of family life.
  • Finance your funeral
  • Be left as a legacy

Is life insurance haram in Islam?

The concept of insurance is not new to Islam. Islamic history suggests that insurance-like arrangements existed during the time of the Prophet Muhammad (PBUH). These arrangements were based on mutual assistance and shared risks. 

In modern times, life insurance is seen as a means of protecting oneself and one’s family. Against financial risks arising from unexpected events such as death or disability.

The main concern regarding the halal status of life insurance in Islam is the concept of interest. Islam prohibits the payment and receipt of interest as it is seen as exploitative and unjust. Therefore, any financial transaction that involves interest is considered haram (prohibited) in Islam.

Forms of life insurance

When it comes to life insurance, the issue of riba arises in two forms: 

    • The premium payment 
    • The death benefit 
  • Premium payment

The premium payment is seen as a payment for the risk coverage provided by the insurance company. As long as the premium payment is based on the actual risk involved and does not include any interest component. It is considered halal in Islam.

  • Death benefit

The death benefit, on the other hand, is seen as a form of inheritance. Islamic inheritance laws dictate that the distribution of inheritance should be based on a set formula. With the surviving spouse and children receiving specific shares. 

Any distribution that deviates from this formula is considered haram. Therefore, if the death benefit paid by the insurance company is in line with the Islamic inheritance laws. It is considered halal in Islam.

Muslim life insurance policies

Numerous scholars concur that when takaful criteria are applied to insurance. According to Islam speaking, life insurance policies are considered to be legal. A type of insurance scheme that complies with Sharia law concepts is called takaful. And it essentially entails the pooling and investing of money.

A type of Islamic insurance known as takaful depends on the cooperative, shared, indemnity/debt, unity, and shared interests tenets. 

Takaful customers are viewed as co-investors with insurance companies. The pooled funds are split between the suppliers and the policyholders. And any losses are likewise split between them.  

There is no assurance that an investment will provide a profit, and there are no certain set gains. Muslims seek life insurance and goods that comply with Islamic law. And the Sharia must make sure that the plans they purchase exclude the following clauses:

  • Any doubt that could be of interest
  • Hazard-filled confusing phrases
  • Gambling 

The Significance of Whole Life Insurance in Islam

Whole life insurance is an important concept in the Islamic faith. It provides financial protection for families in the event of the death of a loved one. And is an integral part of Islamic finance. The concept of insurance in Islam is based on the principle of mutual assistance, which is rooted in the Quranic verse. 

Whole life insurance is a type of insurance that provides coverage for the entire life of the policyholder. It is different from term life insurance, which only provides coverage for a specified period.

 In Islam, whole life insurance is seen as a means of protecting one’s family and providing for their financial needs in the event of the policyholder’s death. 


In summary, whole life insurance is a type of takaful that is based on Islamic principles. And it is designed to provide lifelong coverage and savings. Also, I have described above the Whole life insurance in Islam.

Whole life insurance differs from conventional insurance in that it is based on the sharing of risk and the pooling of resources. Rather than the charging of interest and the transfer of risk.

So, whole life insurance can help to ensure that individuals and their loved ones remain financially secure over the long term.

One Comment

  • Aman says:

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