Assalamualaikum wr Wb, I will highly appreciate if you kindly clarify the following confusion. I have bought “Critical Illness” 25 years ago and I have paid $74.07 per month, total of $22,200 approx. There is a clause in the policy that I will get my principal amount back if I do not have any critical illness, i.e. cancer, heart attack, transplant etc. I am 61 years and got very sick and need transplant. Soon I will qualify for the Critical Illness Insurance which is $100,000 (one hundred thousand dollars).
My question is, can I keep the total $100K for myself and family? Is it halal? If not, can I keep my principal what I paid, $22,000 and give the rest to needy in the family and charity?
Jazakallah khairan
Bismillahi Ta’ala
Walaikum Assalam Warahmatullah,
Critical illness insurance policies, such as those offered by Canada Life, are designed to provide financial support upon the diagnosis of a specified serious illness. These policies typically pay out a lump-sum benefit directly to the insured individual after a survival period, which is the time the insured must survive following the diagnosis before the benefit becomes payable. For instance, the Government of Alberta’s critical illness insurance specifies that the insured must be alive and not have experienced irreversible cessation of all brain functions during the identified survival period. [i]
The lump-sum payment from a critical illness policy is provided directly to the insured, allowing them the flexibility to use the funds as needed. This can include covering medical expenses, funding alternative treatments, paying off debts, or compensating for lost income during recovery. The insurer does not pay medical service providers directly; instead, the insured receives the benefit and decides how to allocate the funds. [ii]
According to Shar’i standards, all conventional insurances wherein insurer provides a monetary benefit to the insured (policy holder) depending on a future undertain event are impermissible. Exception may be afforded if these insurances are mandated as a legal requirement.
In light of this, the critical illness insurance is not permissible to acquire. However, if one has already taken it out, and has given premiums over years, then one should cancel and take such premiums back. One will not be allowed to take any monies beyond the premium which have been paid. Moreover, one must make Tawbah and Istighfar for entering into a ribwi transaction.
If a person is awarded some monies from such an insurance higher than the premiums, then one must get rid of the excess monies beyond the premiums in avenue of charity without any intention of rewards. You may not dispense such money in Masjid or in giving gifts etc. (You may want to read this answer for some other points: http://fatwa.ca/charity/disposing-interest-money-to-poor-is-what-we-do-correct/)
Wallahu A’lam
And Allah Ta’āla Knows Best
Mufti Faisal al-Mahmudi