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Fatwa CenterQuestionable insurance contract
Question
Dear brother, just recently I read about riba and am very scared about it. Without knowledge of this, I had invested some money in insurance. I have opened two insurance policy with a well known Insurance company in India, one is for the pension wherein I have to pay premiums per year upto a certain tenure, the company will invest it in stocks/shares and whatever the return (profit/loss) give it back to me after the tenure or put it in the pension account (after the tenure) where in I will get a certain amount of money as pension, in case of death the total amount invested + profit if any will be returned back to the nominee. Is this haraam as there is no life insurance involved, it is like they will invest in shares and you have to bear the loss/profit, on the other hand if you want to surrender within 5 years of starting the investment, then you cannot even get your invested value because of surrender and other charges. Now my problem is if I want to stop it, I can’t even get the invested money and I will have to continue investing for three more years to get my invested money. Kindly let me know how to deal with it. Also I have taken another insurance for my child, for which I need to invest for a fixed term, in case of any unfortunate incidents for me, my child will get a insured value + the insurance company will pay the remaining premiums and when the term is reached the child gets all the money + profit if any. I guess this is haram but now when I went to surrender the insurance to the company, they said I will lose all my invested money and I need to keep investing for at least 3 more years in order that I can get my invested value back. Is this haram and How to deal with it.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
You did not clarify to us the terms and conditions of the insurance contract between you and the company and you did not clarify to us its kind so that we will know whether it is lawful or unlawful because it is impossible to give a ruling on something which we do not know.
Your statement that the investment of the money is subject to profit and loss and if any loss occurs, it is the subscriber who bears it and not the insurance company, then this is something unusual in commercial insurance companies.
Anyway, it might be that the insurance company where you invested your money abides by the Islamic conditions and its insurance is cooperative and mutual and not commercial nor forbidden. In this case, it is permissible to join the cooperative and mutual insurance and benefit from the profit that it gives. However, we cannot authoritatively state that the transaction is forbidden or lawful since we did not see the terms and conditions of the contract. For more benefit on the ruling on all kinds of insurance, please refer to Fatwa 81425.
However, if we presume that the contract is a forbidden insurance contract and its profits are also forbidden, and you cannot stop it except after the elapse of a given period of time otherwise you will lose what you had invested in it, then we hope that you are not sinful because of this investment as long as you did not know that it was forbidden. It is enough for you to sincerely repent, regret what you did and be determined not to return to it again.
Also, you may keep in the company the money that you had already invested in it because of necessity until the time period expires, and then when you take it, you have to get rid of the forbidden profits and keep the capital money only. You should not leave the profits for the company, rather you should spend it in charitable fields and on the poor and destitute.
The same thing applies to the investment that you had made for your son, you should only take the capital money and get rid of the profit.
Allaah Knows best.
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