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Fatwa CenterRuling on optional unemployment insurance
Question
Asalam alaikum, Jazakumallah kher for all your efforts. I have a question regarding income insurance. I live and work in Sweden where one is insured incase of of unemplyment or injury/sickness that does not allow you to work. One will be paid maximum 1600 dollars/ month, which is not much, house rent is about 1000 dollars. There is also an option where one can pay about 40 dollars/month and incase of unemployment or sickness he/she will get extra 350 dollars/month. My question is, is it haram to have this extra insurance called income insurance? Jazakumallah kher in advance.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and messenger.
Commercial insurance is a contract of compensation based on excessive risk and gambling which is forbidden, because the insured person does not know the exact amount that he has to pay or the exact amount that he is entitled to receive at the time the contract is concluded, as he might pay one installment or two, and then an accident happens thereby rendering the insurer liable to pay him. On the other hand, there might not be any accident at all, and the purchaser of the insurance pays all the installments and (in some cases he) does not receive anything in return. Also, the insurer cannot determine the amount that he should receive or pay in relation to each individual contract. Moreover, the Prophet, sallallaahu ‘alayhi wa sallam, forbade trade that involves risk (Gharar).
Furthermore, insurance is a form of gambling as it involves risk in financial compensations, and loss without damage or cause of damage, and profit without compensation, or with a compensation that is not appropriate, and there are many other reasons why it should be prohibited.
Based on that, it is not permissible to deliberately participate in the commercial insurance transactions that you have mentioned in the question. For more information, please refer to Fatwa 81425.
Allaah Knows best.
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