Taking money from the insurance company with the stipulation that more be paid in the event of delay

Question

Praise be to Allah.

It is not permissible to deal with this company or with the
interest system or insurance system. The former is because it is an obvious
riba-based loan and it is well known that riba is haraam and that there are
stern warnings against it. The scholars are unanimously agreed that every
loan in which additional payment is stipulated is riba.

It makes no difference if the riba is with a Muslim or a
kaafir, and there is no difference between the one who consumes the riba by
taking interest or the one who pays it.

Allaah says (interpretation of the meaning):

“O you who believe! Fear Allaah and give up what remains
(due to you) from Ribaa (from now onward) if you are (really) believers.

279. And if you do not do it, then take a notice of war
from Allaah and His Messenger but if you repent, you shall have your capital
sums. Deal not unjustly (by asking more than your capital sums), and you
shall not be dealt with unjustly (by receiving less than your capital sums)”

[al-Baqarah 2:278-279]

Muslim (1598) narrated that Jaabir (may Allaah be pleased
with him) said: The Messenger of Allaah (peace and blessings of Allaah
be upon him) cursed the one who consumes riba and the one who pays it, the
one who writes it down and the two who witness it, and he said: they are all
the same.

Ibn Qudaamah (may Allaah have mercy on him) said:

“Every loan in which it is stipulated that something extra
must be paid back is haraam, with no difference of scholarly opinion. Ibn
al-Mundhir said: [the scholars] are unanimously agreed that if the lender
stipulates that the borrower must pay extra or give him a gift, and he lends
him money on that basis, then accepting the extra payment is riba. It was
narrated from Ubayy ibn Ka’b, Ibn ‘Abbaas and Ibn Mas’ood that they forbade
every loan that brings benefits.”

Al-Mughni, 6/436.

With regard to taking money via the insurance company, with
the stipulation that extra be paid in the event of delay, this is not
permissible either, even if the person resolves to pay it back. That is for
two reasons:

1 – This is a haraam, riba-based contract, so it is not
permissible to sign it or enter into it or approve of it.

2 – A person may delay paying it for some reason or another,
such as forgetting, sickness and so on, and so he will fall into riba.

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was
asked: Banks give their clients a card called “Visa” which enables the
customer to withdraw money from the bank even if there is no money in his
account at that time, on the basis that after a specific amount of time has
passed, he will repay the bank, and if he does not pay within this set time,
the bank will charge interest, more than the amount withdrawn. The customer
also pays an annual fee for using this card. Please tell us the ruling on
using these cards, may Allaah reward you with good.

He replied: This transaction is haraam, because it involves a
commitment to pay ribaa
(interest) if one does not pay within a certain time. This is an invalid
commitment even if a person believes or thinks it most likely that he will
pay before the time is up, because things may change and he may not be able
to fulfil the commitment. This is a matter which has
to do with the future and man does not know what will happen to him in the
future. So this kind of transaction is haraam. And Allaah knows best.
Shaykh Muhammad ibn Saalih al-‘Uthaymeen, Al-Da’wah magazine, issue
# 1754, p. 37

Based on
this, it is not permissible to deal with this company in the manner
mentioned in the question, because it is obvious riba which is forbidden by
Allaah and His Messenger.

And Allaah knows best.