Comparing Takaful (“Islamic” Insurance) and Conventional Insurance
from a high level, Takaful is the same as conventional insurance. Let’s explore Takaful’s nuances to see if there are any meaningful differences:
Critiquing Rent-To-Own (Ijarah Muntahiya Bittamleek) and Diminishing Partnerships (Musharakah Mutanaqisa)
Unfortunately most Muslim “scholars” are more theory-oriented than they are pragmatic. So let’s look at the theoretical argument for this product:
Is renting allowed in Islam? Yes.
Is a promise to purchase allowed in Islam? Yes.
Is purchasing through installments allowed in Islam? Yes.
From the aforementioned, nothing in the “Ijarah Muntahia Bittamleek” contract is forbidden and therefore the entirety of the contract is permissible.
And using the same line of logic,one can argue:
Is eating grapes allowed in Islam? Yes.
Is eating fermented foods allowed in Islam? Yes.
Therefore eating fermented grapes is permissible and Muslims can now drink wine.
Islam and Personal Income Sharing Agreements: A Preemptive Strike Before The Coming Revolution
I encourage readers, and the Muslim community in particular, to lead the revolution that will take place shortly in the world of finance wherein interest-bearing debt is replaced with income-sharing agreements.
Murabaha: Halal or Haram?
Islamic banks that use this product claim it’s not interest because the amount that Adam owes is fixed and does not increase if he is delinquent on payments. Therefore, we are simply looking at a standard sale wherein a trader buys an item for one price and sells it for an increased price.
Put differently, the argument for Murabaha is:
Does Islam allow someone to buy a car for $10,000 and sell it for $12,000? Yes.
Does Islam allow someone to make a purchase on a deferred payment basis? Yes.
From 1 and 2, neither the bank nor Adam has done anything wrong and Murabaha is permissible in Islam.
Not so fast.