As a
marketing strategy, some insurance company claim that their insurance policy is
Shariah compliant and takaful based. What is your opinion?
Nowadays, we sometimes encounter insurance products
introduced by conventional insurance companies carrying names like “Al-Amin”, “As-Salam”,
“Al-Falah”, etc. The potential customers may mistakenly perceive those products
as Shariah compliant in view of the Arabic names used in the products. Upon thorough scrutiny on the products,
it is discovered that they obtain Shariah
endorsement only pertaining to the investment activities of the fund. Do these type of insurance products fully
comply with Shariah principles merely by meeting with the Shariah investment
requirements?
It has been agreed by majority of Shariah scholars
that conventional insurance contracts contain the following elements:
(a) Gharar – briefly, the contract of conventional
insurance contains the element of uncertainty where the policyholder is unsure
when he will receive his benefits and what will be the amount.
(b) Maisir – the conventional insurance contract has
similarity to gambling activities where the policyholder may receive
significant amount relative to his premium in the event of claim or he may lose
all his premium, otherwise.
(c) Riba – the insurance fund is invested in interest
bearing investment instruments which lead to the existence of riba in the contract. Besides, life insurance policy also offers a
loan feature known as automatic premium loan with interest charged in the event that the premium remains
outstanding after the due date.
Therefore, all conventional insurance policies are
considered non-Shariah compliant due to the existence of the above non-Shariah
elements. Therefore, those conventional
insurance products which invested the funds in Shariah-compliant investment
instruments are still considered non-Shariah compliant products due to the
existence of other non-Shariah elements as mentioned above.
