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Fatwa CenterCash payment to worker's survivor at his death
Question
Life insurance as it is generally is Haraam because it is a kind of Gharar transaction. What if a worker is promised a fixed sum of money to be paid to a specified relative if the worker dies on the job without the worker paying anything for such a deal 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 is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
The money about which you asked is one of two types:
1) A promise of a gift whereby the employer donates it voluntarily. There is no harm in this kind of donation but the employer is not obliged to fulfil his promise even though it is desirable for him to do so.
2) A portion of the wages which is stated in the contract. This is not permissible because the contract is unknown and there is deceit in it. The Prophet 
forbade this kind of contract as reported by Imaam Muslim
. There is deceit in this contract because the worker could resign from his job and therefore he is not allowed to take the amount [life insurance] as it depends on his death. In addition to this, this amount is a portion of all the work period that the worker is supposed to work, and this period is unknown, as he may work for a month and then die, or he may die after twenty years.
Allaah knows best.
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