The objection against the insurance is due to the interest factor which looks similar to the interest prevailing in the banking these days. Seeing today’s banks and finance corporation’s activities, no one can justify that this kind of interest should be legitimate. The bank interest is permissible, as mentioned in the earlier chapters only under ‘Ad Daroora‘ (necessity). But people are taking improper advantage of this ruling and getting loans for those things which do not come under the extreme necessity. The banks pay 2%-3% interest to the depositors but collect 10%-15% compound interest from the debtors. In most of the cases, on non payment, they become the owner of the mortgaged properties. It is most unfortunate that the Muslim money lenders too have entered into this market of earning interest. It was simply unimaginable until a few decades back that a Muslim could ever think of taking interest on the loans.

There is no doubt that every God fearing Muslim will take notice of these Haraam activities. He will not only avoid it but also will preach others to avoid as this kind of interest is strictly Haraam. The car, house construction, dowry articles, home furnishings, business expansions, etc. do not come under the extreme necessity but still people are taking loans for these, and consequently pay huge interest. This is spoiling the morale of the society and creating a race of vanity.

While regarding this interest Haraam, people generalise this Haraam and include the insurance too. This is one of the reasons behind the suspicion against the insurance. The profit or the commission or the bonus received by the policyholder is completely different from the bank interest. For more details please see the chapter ‘misconceptions – Riba‘.

Our argument on permissibility of the interest in the life insurance should not be taken as the permissibility to all types of interests as being practiced by banks and financers today.