We try to come up with an insurance paradigm justified by the Shari’ah principles that may suit the contemporary global Islamic economy. Life insurance is a financial transaction undertaking the responsibility of protecting people against possible future unexpected financial risk. The central idea of the model of Islamic life insurance is that it is a financial transaction relying on the principle of mutual cooperation in order to safeguard individuals from financial risk. Such a model of Islamic life policy should not involve unlawful elements like Riba but it may operate on the basis of al-Mudharabah financing technique. At the same time, an Islamic life policy must not violate the principles of Mirath or Wasiyah as the nominee in the policy should not be the absolute beneficiary but a mere trustee, whose duty it is to obtain benefits from the policy and distribute them accordingly.
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