Insurance companies accrue income via the premiums charged to clients on the policies they have undertaken. These premiums are then gathered in a risk-pool from which claims are paid as they arise. Hence, insurance could simply be explained as the sale of money for money, of a greater or lesser amount, with a deferment in one of the payments. The presence of the following three elements within this business model render insurance impermissible:
a) Riba (interest): can defined as a surplus, void of any counterpart, which one of the two contracting/transacting parties receives.
At the time of claiming, the insured party may receive more or less than the amount paid in premiums to the insurance company.
b) Qimaar (gambling): To pay for something which a person is unsure of acquiring.
Premiums are paid on the agreement that a claim will be paid out if and when an event occurs. Furthermore, the insurance company reserves the right not to pay out the claim if it deems that the client is in contravention of any of the clauses in the policy.
c) Gharar (uncertainty): A transaction based on uncertainty.
The client pays money (the premium) for receiving an uncertain amount of money at a deferred, uncertain time and event in the future.
Employment at an insurance company would result in the aiding and promotion of sin, consequently rendering it being impermissible to undertake employment at such an institution.
Obedience to the Commands of Allah Ta’aala and refraining from that which has been forbidden, along with continuous Dua to Allah Ta’aala will Insha-Allah result in ease in the acquisition of Rizq (sustenance). Paying particular attention to imbibing Taqwa (the fear of Allah Ta’aala) and the performance of Salaah (with Jamaat in the Masjid for males) will invoke the Divine Promise of Allah Ta’aala to provide sustenance from sources a person would never perceive.
We encourage the person concerned to remain steadfast in his endeavour to abstain from impermissible sources of income. No amount of unlawful worldly benefit is worth the torment which could possibly have to be endured in the Aakhirah.