Shariah Ruling on Compulsory and Voluntary Medical Insurance: (a) provided by the government, (b) private health insurance, (c) cooperative health insurance, (d) and pension schemes.

In the name of Allah, Most Merciful, the Bestower of Mercy.

The Shariah ruling on health insurance policies, voluntary and compulsory: (a) provided by the government, (b) medical insurance provided by the employer, (c) community health insurance, (d) pension schemes–and other types of insurance such as car, home, and life.

The first thing that needs to be said is that all forms of commercial insurance (i.e., insurance offered by profit-making companies) are prohibited in Islamic Law (the Shareeʿah). That is because it is considered a form of gambling – and gambling is prohibited in the Qur’an, Sunnah and by consensus (ijmāʿ) of the scholars – these are three sources of Shareeʿah Law that are considered as evidence. So car insurance, house insurance, public liability insurance, health insurance, life insurance, etc., are harām (forbidden) in Islam. In our times, this is the position espoused by scholars such as Ibn Bāz, Al-Albāni, Ibn ʿUthaimeen and Al-Fawzān.

We can explain this as follows: A health company offers you health insurance by you paying a monthly amount of £100 (for example) that is taken from your salary. This insurance covers you and your whole family for possible future ailments, illnesses and accidents. Let’s say after six months, you fall sick, so the insurance company pays out £10,000 to the hospital for your treatment. In this case, you have given an amount of £600 over 6 months to a company, who in return has paid £10,000 on your behalf for an unpredicted eventuality. This is similar in the case of vehicle, and other types of insurance.

On the other hand, it could be case that you have paid health insurance for 20 years, and you have never fallen ill throughout that time. In this case, the health insurance company has taken 20 years of your money without any return for you, and they will not pay it back to you. This is gambling – and prohibited.

It is like buying a lottery ticket for £10. So if your lottery number is picked out of a box of thousands of other numbers, you ‘win’ the sum of £1 million. But if your number is not picked, you lose the £10 – and if you buy a lottery ticket every week for 30 years, you lose the whole amount. This is gambling and prohibited, and commercial insurance companies operate in a similar manner. Allah stated:

يَـٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ إِنَّمَا ٱلْخَمْرُ وَٱلْمَيْسِرُ وَٱلْأَنصَابُ وَٱلْأَزْلَـٰمُ رِجْسٌۭ مِّنْ عَمَلِ ٱلشَّيْطَـٰنِ فَٱجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ ٩٠

“O you who believe, indeed, intoxicants (khamr), gambling, sacrificing on stone alters to other than Allah, and divining arrows are but from the works of Satan, so avoid them that you may be successful. The Devil wants to cause anger and hatred among you through intoxicants and gambling and to distract you from remembering God, and from observing the prayers.” (Qur’an al-Mā’idah 5:90).

As for health cover provided by the government through the Ministry of Health where money is taken from the citizens in the form of a tax (or as National Insurance), then this is permissible. Let’s say 5% or 10% is deducted from the salary of every worker in the country for the use of its citizens (as a whole) for healthcare (hospitalization, surgery, GP consultations, dentists, etc), then this is permissible for the general welfare of the people. This is not gambling. This tax goes into the national treasury (in Muslim countries: baytul-māl) – and is for the good of the nation – and it helps even those who do not pay taxes such as children, the elderly, the sick, the poor, single mothers, the disabled and others who are in need.

Likewise, payments (compulsory or voluntary) to government pension schemes are permissible as long as the pension contributions are not invested into anything harām (such as breweries, banks, etc.), and are not earning interest (i.e., usury/ribā). This is not the prohibited insurance, rather it is a pension scheme, where the contributor receives a return on his investment after he retires – and if he dies, it is given to his inheritors. One must make sure that the pension scheme is strictly Shariah compliant, that is the responsibility of the employee because he is the one who will have to live on its fruits.

As for health insurance provided by private insurance companies (التأمين التجاري – at-ta’meen at-tijāri) then it is harām without a doubt – and the Muslim is obligated to opt-out when such schemes are offered by the employer that requires an amount that is taken from the salary. So, whether a person takes private health insurance or employer health insurance which is paid to commercial insurance companies, it is harām (impermissible), regardless of whether it covers pregnancies, eye care, dental care, cancer treatment, etc. And the same applies to life insurance, car insurance, home insurance, pet insurance, etc.

However, if the employer offers free healthcare or health cover to the employee (or his family) as part of their employment package, then it is permissible, and this is not gambling as Shaikh Al-Fawzān has explained.

Then there is another type of health coverage which is known as cooperative health insurance (التأمين التعاوني – at-ta’meen at-taʿāwani), which is ‘not-for-profit’. This is where a group of individuals or a community come together to support each other in their times of poor health, need or poverty. So, each member of the community (or association) gives a weekly or monthly amount that goes into a collective fund. When any member of the community falls ill, funds are taken from the collective pot and given to those in need. Shaikh Ibn Bāz (rahimhullāh) stated that this is halāl (permissible) because there is no commercial interest, and it provides benefit to those who pay into the cooperative health insurance – and it can even be used to help those who did not pay into the fund if the cooperative decides that. So, in this case, there is no harm.

Employer compulsion:

If you are compelled by the employer or the state to pay health insurance companies, then you should try your best to opt-out – even try and refuse to sign the employment contract unless they withdraw the insurance contribution clause. If it is not possible to resign due to family commitments and the need to live, then take the least amount of insurance cover – and the same applies in those countries that mandate car insurance – the least cover should be taken to avoid prosecution. As for claiming from the insurance company in the event of an illness or accident, then the amount that should be claimed should not exceed the sum-total of what you have paid over the months or years. If the company insists on paying the full amount, and will not accept any reduction, then the excess should be given in charity, and the claimant should not seek to benefit from it.

Allah knows best.

Excerpts from the Scholars:

Shaikh Al-Fawzān on the prohibition of commercial insurance – and the permissibility of paying into pensions that are free of Ribā (interest):

Shaikh Al-Fawzān on the impermissibility of paid health insurance schemes (harām) – and the permissibility of healthcare that is provided by the employer free of charge (halāl):

بعض الموظفين في الشركات تتكفل الشركة بعلاجهم عن طريق التأمين الصحي فما حكم استفادة موظفيها من هذا التأمين؟ الجَوَابُ: التأمين من الموظف نفسه يؤخذ منه أو الشركة تدفع؟ إن كانت الشركة تدفع فهذا يعتبر من راتبه من حقوقه عليهم كأنه من الراتب، أما إن كانوا يأخذون منه هو فلا يجوز هذا؛ لأن هذا تأمين تجاري

Shaikh Ibn ʿUthaimeen explains that insurance contracts and taking insurance policies are harām unless one is compelled by law – in that case he takes the policy but only takes back (if there is an accident) what he paid the insurance company:

Shaikh Ibn ʿUthaimeen explains the evils of medical insurance because it is gambling and it can be considered to be worse than ribā!

Shaikh Al-Albāni explains the evils of insurance – that it is gambling (qimār) – and regardless of what title it is given, it is prohibited. If one is compelled by the government, then he has to pay it without any desire or choice of is own. Insurance policies and paying for insurance is the very essence of gambling that Allah has made harām:

May Allah have mercy on these great Imāms of the Sunnah.

Authored by Abu Khadeejah ʿAbdul-Wāhid.