Q. Could you please explain whether life insurance and pension plans are acceptable from the Islamic point of view. With regard to the latter, I would like to cite the case of a man who does not have any children by his present wife, but has a daughter by a previous marriage. His pension would automatically go to his wife in case of his death, unless he changes that. He is seriously considering that in order to assign it to his daughter. As for the rest of his property, he wants to make a will giving 30 percent to his daughter with the rest distributed according to the Islamic rules. Please comment.
Yusuf Ahmad
A. As for life insurance, scholars have been giving two different verdicts with regard to its permissibility. On examining the evidence given by both groups of scholars in support of their argument, I have had no doubt that the scholars who say that insurance is permissible have much stronger evidence. They rely on a solid basis. Most notably, the late Sheikh Mustafa Al-Zarqa, one of the leading scholars in the twentieth century, wrote a book on insurance which thoroughly examines all issues involved. He gives a clear verdict of insurance being permissible in Islam. I fully subscribe to this ruling.
Pension plans are generally acceptable. They work on practically the same basis as life insurance, with some differences. Pension plans are operated by most, if not all, Muslim countries. They are also applicable to Al-Azhar and other Islamic universities.
Normally pension plans provide support to a retired employee, his wife, and children below a certain age. The idea is that after that age, which is normally 21, children should be able to support themselves. Pension is a benefit given to those who are at a stage of life when they cannot support themselves. This is why it is paid to a retired employee and his wife, or spouse. It is not part of a person’s savings, unless the plan specifies that.
As such, it is not treated as part of one’s estate, which is divided according to the law of inheritance. Hence, the person in this case should look closely at his wife’s and daughter’s situation. If he changes the pension benefit, he may be depriving his widow of a right which he should not do.
As for his inheritance, if the situation continues as it is and he gets no more children, his estate is divided in the following manner: One-eighth to his wife, and one-half to his daughter. This assumes that neither of his parents or grandparents are alive at the time of his death. The remainder goes to other heirs as the case may be. If he has brothers and sisters, they are the ones to take the remainder, which is divided among them on the basis of one share for a sister and two for a brother. If he has no siblings, it goes to his nearest relatives.
The man in this case cannot make a will in favor of his daughter because she is his heir. Under Islamic law, no will may be made in favor of an heir.
Arab News Islam 30 June 2003
