In my article Insurance: Halal or Haram?, I pointed out that insurance in Islam was in fact not only permissible in Islam but indeed virtuous when used properly.
I argued that the way an insurance company managed its cash reserves is a separate matter from whether insurance was Halal or Haram just as the way Apple managed its cash reserves is a separate matter from whether an iPhone is Halal or Haram.
I suppose a response to this would be to say: if we’re not responsible for how a company uses our money after we make payments to it, are we allowed to purchase goods or services from a company that is involved in human trafficking? What about one that operates sweatshops and employs minors? In other words, where does one draw the line?
I’ll admit, answering the question of what level of responsibility we bear regarding how our money is used after we’ve spent it is not an easy moral question to answer. This is certainly not a question I can answer for you. In these cases, there is no substitute for employing one's best judgment and using common sense. Questions you should ask include: (1) Do I have alternatives? and (2) How necessary is the product I'm buying (discussed below).
How Necessary is the Product I’m Buying?
If I’m buying a t-shirt that I know was made by minors who were taken out of school to make them, a rational response would be to say: I’m going to buy a different t-shirt brand even if it costs a couple dollars more because I don’t want to support the exploitation of minors. On the other hand, if there are no alternatives and the product isn’t necessary altogether, for instance, diamonds that I know are being used to finance conflicts in Africa, then I can simply go without that product altogether.
However, what I can say with certainty, is that the question of our moral responsibility regarding how our funds are used after we purchase a product is an entirely separate question from the question I set out to answer in the article on whether or not insurance is Halal or Haram.
If the argument is that, because some insurance companies manage their cash reserves by investing in interest-bearing products, insurance is forbidden in Islam, accepting this logic makes almost any payment to any company prohibited in Islam. This seems like a rather wide net to cast which is rather unproductive and would render Islam's prohibitions on anything, basically meaningless.
I think you make a good point here, even if one believes that all interest is riba (which I do not).
Salam
Thank you for all efforts you make to enlighten people.
I have one question regarding Trading sock options, I mean puts and calls without owning the stock itself, is it right?
I think you are the one who can answer this question since you are in the field.
Jazak Allaho Bikhayr.
Thanks brother, inshAllah I will address this.
Every major corporation in the US especially, analyzes their percentage of profits (assets) to reinvestment back into their own company and what they analyze to put towards the global market at large. With trying to follow the money method, you wouldn't be able to buy food from the supermarket due to this reasoning alone. You have no idea if your cash given is going towards the supermarket's investments in Anneheim (alcohol brewing company stock that is commonly invested in many 401k diversified stocks without many ppl knowing). Regardless of that, if you pay towards life insurance and you don't pass away within that term, your money paid during that time can very well be used to assist in the payout of another family, where their lost loved one also paid into that same pool you did. This is actually a very firm Islamic way of even conducting this, but again, you can't determine for any where the insurance company chooses to route their finances for that year and beyond. The Prophet(PBUH) was a genius and understood markets and growth of money during different times, which is clearly expressed many times over in multiple ahadiths. So a PURCHASE of life insurance benefits your family from the moment of purchase and unless there was a separate Islamic insurance pool you can invest in for your life insurance, all you can do is purchase what you think the best company and stay away from those that are well known to have their interests in major haram activities. May Allah(SWT) guide us all and forgive us in any mistakes we make, trying to live the life of today using our knowledge and constant references back to Holy Quran.
Jazakallah. I enjoy very much your take on all of your topics. You are doing a great service for more ppl than you may even be aware of. Keep up the great work Brother Rakaan, inshallah.