Insurance and Islam: Buy Life Insurance on your Life and enrich strangers who want you dead!

Ahmed Shaikh — Mon, 14 Jun 2010 19:44:37 +0000

The Wall Street Journal has article on the exploits of the late New York Attorney Arthur Kramer, who purchased large life insurance policies and then immediately sold the right to benefit from them to investors. Under normal circumstances, the government would have an interest in not allowing investors to benefit from the death of people they don’t particularly have reason to care about. However selling a policy to investors after the fact is common. People treat life insurance like an asset, chiefly because it is one.

When it comes to Muslims, life insurance is fairly complex. Many scholars regard insurance as is sold in the United States as prohibited no matter who the beneficiary, as the insurance benefit frequently includes riba and gharar. Muslim countries do have “Sharia’h Compliant” life insurance available, known as takaful, generally not available to Americans. Some have found no harm in life insurance though since the asset is paid out at death, it should be distributed based on the Islamic Rules of Inheritance.

How much of “Islamic Finance” is legitimate?

Ahmed Shaikh — Thu, 22 Apr 2010 18:59:22 +0000

Let me just say upfront this post is not really about the Islamic financial products that we are familiar with in the United States, where "Islamic Finance" products known in much of the world do not exist yet. The foundation for what passes for Islamic Finance are corporate created "Sharia'h Compliance Boards" that provide scholarly approval for new-fangled product designs. The Islamic Finance Industry globally, is enormous. It also appears the industry is completely out of the hands of Muslims and Islamic Scholars, who seem to have no meaningful influence on what occurs in this world.

A piece in the Financial Times by Andrew Cunningham (Registration Required) addresses this problem, concluding that Islamic Scholars should have more say about the strategy involved. Corporate decisions are made in boardrooms. Compliance boards are paid for their stamps of approval. Scholars have made efforts to rein in some control. Cunningham cites The Islamic Financial Services Board and the Accounting and Auditing Organisation for Islamic Financial Institutions, which are both admired and respected for their work. However they do not appear to be remarkably influential. This makes sense. Such organizations do not control the strategy, direction or policies of the corporations, which do not have the Sharia'h as their starting point.

Plan Islam » Islamic Finance

Insurance and Islam: Buy Life Insurance on your Life and enrich strangers who want you dead!

How much of “Islamic Finance” is legitimate?