Health insurance is a type of insurance policy that provides financial coverage for medical expenses and healthcare services. It is a contract between an individual and an insurance company, where the individual pays a regular premium. In return, it can cover expenses such as hospitalization, surgeries, doctor visits, and prescription medication.
As a practicing Muslim, you may have heard discussions about whether health insurance is haram or halal. The purpose of this article is to provide an overview of the concept of health insurance in Islam and to explore the different opinions on whether it is halal or haram. We will present the arguments for and against health insurance and discuss how it can be structured in a way that complies with Islamic principles. My goal is to help our readers make an informed decision on this important issue.
Keynote
- Islam considers commercial insurance (life, health, and property insurance) to be haraam since it involves ambiguity and gambling.
- An individual forced to take out insurance or in great need of health insurance is an exception to the prohibition against insurance.
- A doctor can work in the insurance department of a hospital since some patients require health insurance or are forced to purchase it.
Is Health Insurance Haram?
General health insurance is considered haram. As it involve with riba (interest), gharar (uncertainty), or maysir (gambling). Takaful is a Shariah-compliant alternative for Muslims. Consult a qualified Islamic scholar before making decisions.
Types of Health Insurance
There are many different types of health insurance plans available, each with its own set of benefits, limitations, and costs. Here are the top 5 types of health insurance and how they work:
| Type of Health Insurance | How It Works |
|---|---|
| 1. Health Maintenance Organization (HMO) | HMOs require you to choose a primary care physician who will be responsible for coordinating your medical care. You can only see doctors within the HMO network, except in emergencies. HMOs usually have lower out-of-pocket costs and premiums than other plans. |
| 2. Preferred Provider Organization (PPO) | PPOs allow you to see any doctor or specialist without a referral, but you will pay less if you see a provider within the PPO network. PPOs typically have higher premiums and deductibles than HMOs. |
| 3. Point of Service (POS) | POS plans are a combination of HMO and PPO plans. You are required to choose a primary care physician who will coordinate your medical care, but you can also see doctors outside of the network, although at a higher cost. |
| 4. Exclusive Provider Organization (EPO) | EPOs are similar to PPOs, but you are only allowed to see doctors within the network, except in emergencies. EPOs typically have lower premiums than PPOs. |
| 5. High-Deductible Health Plan (HDHP) | HDHPs have lower premiums than other plans, but you are required to pay a high deductible before the insurance company begins to pay for your medical expenses. HDHPs are usually paired with a Health Savings Account (HSA), which allows you to save money tax-free to pay for qualified medical expenses. |
How Health Insurance Companies Make Money
Health insurance companies make money by collecting premiums from their customers and investing that money to earn a return. Here is a step-by-step guide to how health insurance companies make money:
- Health insurance companies collect premiums from policyholders regularly.
- The collected premiums are invested in various securities, such as stocks, bonds, and real estate.
- The investments earn a return, including interest, which is used to pay for policyholders’ medical expenses and generate a profit for the company.
- Insurance companies manage risk by carefully underwriting policies to ensure they are not taking on too much risk.
Why Is Health Insurance Haram?
As Muslims, it is important to understand the Islamic perspective on health insurance. While health insurance can provide financial protection in times of medical emergencies, there are certain aspects of health insurance that may be considered haram (prohibited) in Islam, such as riba and gharar.
1. Riba and Health Insurance
Riba refers to the practice of charging or receiving interest, which Islam considers forbidden. Health insurance, particularly in conventional insurance systems, involves riba as it involves paying a fixed amount of premium, which is essentially interest charged by the insurer to the insured. The interest is charged for providing the coverage, which is essentially a financial benefit. Muslims are required to avoid riba, which is considered a major sin in Islam.
Avoiding riba is crucial for Muslims as it is considered a major sin in Islam. Muslims are required to engage only in transactions based on mutual benefit and free of exploitation. Riba violates these principles and is therefore considered haram. As the Quran mentions:
“Those who devour usury will not stand except as stands one whom the Satan by his touch hath driven to madness” (2:275). Another verse states, “O you who believe! Devour not usury, doubled and multiplied; but fear Allah; that ye may really prosper” (3:130).
Related Hadiths also emphasize the importance of avoiding riba. Narrator by Jabir ibn Abdullah “The Messenger of Allah (ﷺ) cursed the one who takes interest, the one who gives it, the witness to it, and the one who writes it down.” (Authentic Grade: Sahih)
Another Hadith states, “A dirham of riba which a man receives knowingly is worse than committing adultery thirty-six times” (Ahmad, Daraqutni).
- In addition to the religious perspective, there are also economic reasons to avoid riba. It can lead to economic instability, inequality, and exploitation. According to the World Bank, 767 million people live in extreme poverty, and riba can exacerbate their situation by perpetuating cycles of debt and poverty.
- According to a Pew Research Center report, Muslims in several countries consider riba a major moral issue. For instance, 94% of Muslims consider riba morally wrong in Egypt.
- The late Sheikh Zayed bin Sultan Al Nahyan, former president of the United Arab Emirates, said, “Riba is the cause of all economic and social problems in the world. It is the cancer that destroys societies and nations.”
- According to the Islamic Finance Development Report, the global Islamic finance industry is growing rapidly, with assets reaching over $3.95 trillion in 2021.
2. Gharar and Health Insurance
Gharar refers to uncertainty, risk, or speculation in transactions. In conventional life insurance, there is an element of gharar as the insured pays a premium for uncertain events in the future. The amount of premium paid may not necessarily reflect the actual cost of the coverage, and the insurer may deny coverage for various reasons, leading to uncertainty for the insured.
Avoiding gharar is important for Muslims as it is considered a form of deception and is also haram in Islam. Islam encourages transparency and clear terms in transactions to avoid any deception or exploitation. As the Quran mentions:
“O believers! Do not devour one another’s wealth illegally, but rather trade by mutual consent. And do not kill ˹each other or˺ yourselves. Surely Allah is ever Merciful to you.” (4:29).
Related Hadiths also emphasize the importance of avoiding gharar. Narrator by Abu Huraira the Messenger of Allah (ﷺ) said: “Whoever buys foodstuff should not sell it until he has taken possession of it.” (Authentic Grade: Sahih)
These Hadiths illustrate the importance of clear transaction terms and conditions to avoid any uncertainty or deception. Is it haram to work for a life insurance company; Yes if they have ambiguous terms and conditions.
In addition to the religious perspective, there are also economic reasons to avoid gharar. Transaction uncertainty and risk can lead to economic instability and discourage investment, innovation, and growth.
- According to a survey by the International Association of Islamic Banks, 67% of respondents considered gharar a major challenge in Islamic finance.
- The late Sheikh Abdullah bin Bayyah, a prominent Muslim scholar, said, “Gharar is a major obstacle to trust and confidence in transactions. It can lead to disputes and undermine the social and economic fabric of society.”
Arguments in Favor of Health Insurance and Islamic Perspectives
Muslims need to understand the Islamic perspective on health insurance and whether it is permissible to take out a policy. While riba and gharar may make certain aspects of health insurance haram, arguments favor taking out health insurance when necessary, such as when a person is forced or in greater need of money.
According to Islamic scholars, there are circumstances where it is permissible to take out health insurance, as long as the policy does not involve riba or gharar. Here is a table outlining how Islamic scholars justify taking out health insurance in certain situations:
Sheikh Yusuf al-Qaradawi, in this book “The Lawful and Prohibited in Islam” stated that insurance is permissible as long as it does not involve riba (usury), gharar (uncertainty), gambling, or injustice.
| Islamic Scholar | Justification |
|---|---|
| Imam Shafi’i | “In a situation where a person is compelled to purchase health insurance due to a dire need, such as illness, and there is no other means of obtaining funds, then it would be permissible.” |
| Mufti Muhammad ibn Adam al-Kawthari | “If a person is in genuine need of medical treatment and has no other means to finance it, and his life is at risk, then taking out an insurance policy would be permissible.” |
| Dr. Akram Nadwi | “If a person is compelled to take out health insurance because they cannot afford to pay for medical treatment out of pocket, then it would be permissible, as long as the policy does not involve riba or gharar.” |
How to Avoid Conventional Health Insurance
It is important to find alternatives to conventional health insurance that align with Islamic principles and avoid riba and gharar. One such alternative is halal takaful insurance, which is a sharia-compliant form of mutual insurance. Here are the top 5 steps to follow to avoid conventional health insurance and opt for takaful:
- Research: Research takaful providers and the different types of takaful plans available. Compare them to conventional health insurance plans to find the one that best suits your needs.
- Find a Takaful Provider: Once you have researched, choose a reputable takaful provider with a good track record. Check their financial stability and ensure they have a strong asset base to protect their policyholders.
- Choose a Takaful Plan: Choose a takaful plan that meets your health care needs and aligns with Islamic principles. Takaful plans may differ in terms of the covered medical expenses, premiums, and co-payments, so be sure to choose the one that is most suitable for your needs.
- Make Regular Contributions: Takaful works on the principle of collective responsibility, where all participants make regular contributions to a common fund to cover the medical expenses of the participants who need it. Be sure to make regular contributions to ensure that you are covered in times of medical emergencies.
- Stay Healthy: In addition to opting for takaful, it is also important to take care of your health by eating well, exercising, and avoiding risky behaviors that could lead to health problems. Staying healthy can help reduce the likelihood of needing medical treatment, which in turn can help reduce the cost of takaful contributions.
Note: According to a 2021 report by the Council on American-Islamic Relations (CAIR), many Muslim Americans face discrimination and bias when seeking healthcare, with 41% of Muslim respondents reporting having experienced religious discrimination while receiving medical care.
1. Takaful and Islamic Perspectives
Takaful is an Islamic insurance model that helps Muslims to avoid riba and gharar in insurance transactions. Takaful operates on the principles of mutual assistance and shared responsibility, where participants contribute to a fund to provide coverage for needy participants. Takaful is important in Islam as it offers a Shariah-compliant alternative to conventional insurance systems.
In Takaful, the premiums paid by participants are considered contributions to a mutual fund, which a Takaful operator manages. The Takaful operator invests the contributions in Shariah-compliant assets and uses the returns to pay claims and other expenses. In this way, the Takaful model eliminates the interest element and reduces uncertainty and risk in insurance transactions.
Islam encourages transparency, fairness, and mutual benefit in all aspects of life, including in financial transactions. Takaful operates on these principles and offers a way for Muslims to meet their insurance needs without compromising their religious beliefs. As mentioned in the Quran,
“And help one another in righteousness and piety, but help not one another in sin and rancor: fear Allah: for Allah is strict in punishment” (5:2)
“O believers! Do not devour one another’s wealth illegally, but rather trade by mutual consent. And do not kill ˹each other or˺ yourselves. Surely Allah is ever Merciful to you.” (4:29)
Related Hadiths also emphasize the importance of mutual assistance and shared responsibility. Narrator by Anas bin Malik, “The Prophet (ﷺ) said, “None of you will have faith till he wishes for his (Muslim) brother what he likes for himself.” (Authentic Grade: Sahih)
Narrated by Abu Musa: The Prophet (ﷺ) said, “A believer to another believer is like a building whose different parts enforce each other.” The Prophet (ﷺ) then clasped his hands with the fingers interlaced (while saying that).
- According to a report by the International Takaful Summit, the global Takaful industry is expected to reach $50 billion by 2023.
- Sheikh Yusuf Al-Qaradawi, a prominent Muslim scholar, said, “Takaful is a way of returning to the basics of insurance, where people help each other in times of need and share risks and losses.”
2. Community-Based Healthcare Models
Community-based healthcare models are an alternative to traditional health insurance models that help Muslims to avoid riba and gharar. These models involve pooling resources and sharing costs among community members to provide healthcare coverage.
These models operate on the principles of mutual assistance and shared responsibility, where community members pool their resources and share healthcare coverage costs. In this way, community-based healthcare models eliminate the interest element and reduce uncertainty and risk in healthcare transactions.
Islam encourages Muslims to care for one another and to support one another in times of need. Community-based healthcare models align with these principles and provide an alternative to conventional health insurance models that may involve riba and gharar. As the Quran mentions:
“And donate from what We have provided for you before death comes to one of you, and you cry, “My Lord! If only You delayed me for a short while, I would give in charity and be one of the righteous.” (63:10).
Related Hadiths also emphasize the importance of mutual assistance and solidarity. Abu Huraira reported Allah’s Messenger (ﷺ) as saying: “He who alleviates the suffering of a brother out of the sufferings of the world, Allah would alleviate his suffering from the sufferings of the Day of Resurrection” (Muslim).
- According to a report by the World Health Organization, community-based healthcare models have been shown to improve access to healthcare and to reduce healthcare costs.
- The late Sheikh Zayed bin Sultan Al Nahyan, former president of the United Arab Emirates, said, “The concept of social solidarity is an essential element of Islam. We have a duty to care for one another and to help those in need, regardless of their race, religion, or nationality.”
- In a survey by the International Federation of Red Cross and Red Crescent Societies, 78% of respondents agreed that community-based approaches to healthcare are important for achieving universal health coverage.
3. Zakat
Zakat is an obligatory form of charity in Islam that helps Muslims to avoid riba and gharar. Zakat is one of the five pillars of Islam and requires Muslims to donate a portion of their wealth to those in need.
Zakat helps Muslims avoid riba and gharar by promoting a social assistance system based on transparency, fairness, and mutual benefit. Zakat is collected and distributed by Islamic authorities and is used to support the poor and needy in a transparent and accountable manner. By promoting a social assistance system based on these principles, Zakat eliminates the interest element and reduces uncertainty and risk in charitable transactions.
Zakat is a means of fulfilling this obligation and is considered a form of worship in Islam.
Surah Al-Hadid, Verse 18: “Indeed, the men who practice charity and the women who practice charity and [they who] have loaned Allah a goodly loan – it will be multiplied for them, and they will have a noble reward.”
Surah Al-Tawbah, Verse 104: “Do they not know that it is Allah who accepts repentance from His servants and receives charities and that it is Allah who is the Accepting of repentance, the Merciful?”
Related Hadiths also emphasize the importance of Zakat in Islam. Narrated By Abu Huraira: Allah’s Messenger (ﷺ) said, “If somebody gives in charity something equal to a date from his honestly earned money – for nothing ascends to Allah except good – then Allah will take it in His right (hand) and bring it up for its owner as anyone of you brings up a baby horse, till it becomes like a mountain.”
Narrated Abdullah by ibn Umar: The Prophet (ﷺ) said: “Allah will not show mercy to him who does not show mercy to others.”(Book Name: Sunan Abu Dawud, Authentic Grade: Sahih)
- According to a report by the Pew Research Center, Muslims worldwide gave an estimated $77 billion to charity in 2015, with Zakat being a major component of these donations.
- Sheikh Abdul Aziz bin Abdullah Al-Asheikh, the Grand Mufti of Saudi Arabia, said, “Zakat is a means of purifying one’s wealth and promoting social justice. It is an obligation that is central to our faith and is a way of fulfilling our duty to Allah and to our fellow human beings.”
Final Thoughts
The topic of health insurance in Islam is a complex and nuanced one, as it involves balancing the need for healthcare with the principles of Islamic finance. While riba and gharar may make certain aspects of health insurance haram, there are alternatives that are in line with Islamic principles.
There are several potential solutions for those who believe health insurance is haram. These include opting for Takaful, Community-based healthcare models, and Zakat.
Understanding the Islamic perspective on health insurance and making informed decisions that align with their beliefs and values is important. By following Islamic finance principles and seeking alternatives that avoid riba and gharar, Muslims can ensure that they make ethical and sharia-compliant choices regarding healthcare.
Health Insurance Haram (FAQs)
Is medical insurance halal?
Medical insurance is a complex topic within Islamic finance, with differing opinions on its permissibility. Islamic scholars argue that certain types of medical insurance, such as takaful-based insurance, are halal as they follow the principles of mutual cooperation and risk-sharing. And conventional medical insurance, involves interest-based transactions and speculation, which is haram.
Is it haram to have a family doctor or not?
It is not haram to have a family doctor. In fact, seeking medical treatment is encouraged in Islam. However, Muslims should ensure that any medical treatment they receive aligns with their religious beliefs and values.
What are the Islamic guidelines on health care expenses?
In Islam, it is considered a communal obligation to ensure everyone has access to adequate health care. Muslims are encouraged to seek medical treatment when necessary and to take care of their physical well-being. However, unnecessary medical expenses should be avoided, and any health care expenses should be paid for in a halal manner.
Can someone explain the Islamic concept of takaful and how it relates to health insurance?
Takaful is Islamic insurance based on mutual cooperation and risk-sharing principles. In takaful, policyholders collectively contribute to a fund that is used to pay for any covered losses. Takaful can be used to provide health insurance coverage, and is considered a halal alternative to conventional health insurance.
How do Muslims living in non-Muslim countries navigate the issue of health insurance?
Muslims living in non-Muslim countries may face challenges in finding halal health insurance options. In these cases, it is important to consult with a qualified Islamic scholar to determine which options are permissible and in line with Islamic principles.
What are some common misconceptions about the Islamic view on health insurance?
One common misconception is that all forms of health insurance are haram in Islam. However, as discussed earlier, Islamic scholars have differing opinions regarding the permissibility of certain types of health insurance, such as takaful-based insurance. Another misconception is that seeking medical treatment is discouraged in Islam, which is not the case.
How can Muslims ensure their health care needs are met while adhering to their religious beliefs?
Muslims can ensure their health care needs are met while adhering to their religious beliefs by seeking out halal health care options, such as takaful-based insurance or medical cost-sharing programs. It is also important to prioritize preventive care and seek medical treatment in a manner consistent with Islamic values.