Life insurance is an important part of financial planning and many people of the Islamic faith would like to know if it is allowed under Islamic law.


Life insurance is a form of risk management that allows individuals or groups to protect themselves financially against the loss of a loved one or a primary breadwinner. It is an important part of any financial plan, but some wonder if it is acceptable in Islam.

Under Islamic Law

The most important point to consider is if it is allowed or haram (forbidden) under Islamic laws. In general, the consensus is that life insurance is permissible, but there are certain important rules that must be adhered to.

Important Rules to Follow

    • Premiums must not be fixed. The amount that must be paid as a premium should not be fixed and should depend on how much the insurer is willing to pay.
    • Profit should not be the motive. Under Islamic law, the motive of the insurance should be to protect and not to generate a profit.
    • No interest should be involved. Insurance should not involve interest, as this is haram (forbidden) in Islam. All payments should be made in cash.
    • Life insurance policy holder should have ownership. According to Islamic law, the policy holder should have ownership of the policy and not be just a ‘partner’ with the insurer. Ownership must be established from the beginning.

In conclusion, life insurance is permissible in Islam if it adheres to the necessary rules. It allows individuals and groups to protect themselves financially against the loss of a loved one or a primary breadwinner, and it is important to make sure that the policy meets the necessary requirements.

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