Is Disability Insurance Permissible? – Shaykh Muhammad Carr

Answered by Shaykh Muhammad Carr

Question

As a dentist, the physical demands of my profession sometimes lead to chronic pain conditions or disabilities. Are you aware of any fatawa regarding disability insurance in the US? In your understanding, is disability insurance considered permissible (halal) or impermissible (haram)?

Answer

In the Name of Allah, the Most Merciful and Compassionate. 

Thank you for reaching out and seeking clarification on this important matter. I understand your concerns, and it’s commendable that you seek to ensure that your financial arrangements align with Islamic principles.

The primary focus should be on the underlying structure of the insurance rather than its specific purpose. If the foundational structure adheres to Sharia principles, it can be applied to various needs, whether short-term or long-term, medical or otherwise. 

If the disability insurance policy you are considering adheres to Islamic principles and is structured in a Sharia-compliant manner, you can avail yourself of this protection. However, I would recommend consulting with a local, knowledgeable Islamic scholar or a trusted authority in Islamic finance to ensure that the specific details of the policy align with Sharia guidelines and provide you with the peace of mind you seek.

In the absence of a certified Sharia-compliant product, conventional cooperative or mutual insurance vehicles operating in the United States might satisfy the Sharia criteria. Nonetheless, consulting with a local, knowledgeable Islamic scholar or a trusted authority in Islamic finance remains crucial in such cases.

Insurance – Shari‘a Perspective  

Insurance, defined as implementing measures to protect against potential future risks or hazards, is firmly grounded in Sharia law. Just as risk is an inherent aspect of daily life, safeguarding ourselves against such risks is equally natural and normal.

The crucial aspect lies in the method used to address these risks. Contemporary scholars generally agree that cooperative insurance, based on the Takaful model, is permissible.

Cooperative insurance occurs when a group of individuals mutually assist each other by contributing to a fund to compensate for the loss or damage caused by a hazard that could affect any one of them. [Karan, Medical Insurance]         

A group of persons enters into a partnership; each individual contributes a specified amount; whoever is afflicted by any calamity is assisted from this collective fund; thus, each individual is considered an insurer and insured. [Ibid]         

The nature and relationship between the contracting parties are the most important aspects of cooperative insurance. It most notably distinguishes it from commercial insurance. In a cooperative format, as stated previously, the legal roles of the customer and owner are united in one form, “members.” 

Proofs  

 The well-documented story of Yusuf (May Allah grant him peace) serves as one of the most prominent examples of safeguarding against potential hazards and risks. Allah recounts, “He said, ‘You are to diligently sow for seven hard years, and whatever you reap leave in its ear, save for a little from which you eat. Then just after that shall come seven unsparingly dire years that devour all you have put up for them, save a little you keep for seed.” 

Additionally, a tradition attributed to the Ash‘ariyyin reads: ‘The Ash‘ariyyin, when at war or residing and their provisions ran short, would pool their resources and divide them equally.’ [Bukhari]

From this tradition, we can derive the following:

• The explicit approval of the Prophet (May Allah bless him and grant him peace) is evident in his statement, ‘I am from them, and they are from me.’
• The tradition indicates that they pooled their resources without specifying any particular amounts, suggesting that contributions varied.
• Despite differing contributions, they divided the pooled resources equally, resulting in some receiving more than they contributed and others receiving less.
• The cooperative objective described in the tradition overlooks the element of riba.

Takaful in The USA   

According to the Crowell report dated March 2019, commercial and residential property insurance is the only insurance currently offered as takaful in the United States.

I pray this is of benefit and that Allah guides us all.

Given the considerations in such cases, we urge you to please consult reliable local scholars or counselors about the specifics of the situation. Jazakum Allah khayr. May Allah facilitate all ease and good for you. 

[Shaykh] Muhammad Carr

Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life. 

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.