Currency-Indexed Life Insurance with Premium Refund and Its Evaluation from the Perspective of Islamic Law

This article examines the Islamic legal evaluation of a foreign currency-indexed life insurance product with return of premiums, which represents a specific variant within the broader scope of life insurance. Life insurance is generally categorized as a sub-branch of personal insurance within the conventional insurance system. Its primary objective is to compensate for economic losses resulting from death or permanent disability, or to provide a steady income in later stages of life. In countries like Turkey, where high inflation causes continuous fluctuations in the value of money, insurance companies have introduced foreign currency-indexed life insurance products with premium return options. In such policies, premiums are paid based on a foreign currency index, and if the risk of death does not occur by the end of the contract period (typically 10 or 12 years), the full amount of premiums is refunded in the same currency value. If the insured passes away during the term, a foreign currency-indexed compensation is paid to the beneficiaries. While insurance and life insurance have been discussed in Islamic legal literature, the specific evaluation of this new product remains necessary. Key concerns in Islamic law regarding insurance include gharar (uncertainty), maysir (gambling), and riba (interest), as well as the types of investment instruments used by insurance companies. This study assesses whether these elements are present in the structure of the foreign currency-indexed life insurance with return of premiums. Another critical issue is the full refund of premiums if no risk occurs. This raises the question of whether the contract should be seen as a loan (qard) or a distinct contract within the insurance framework. The legal outcome changes significantly depending on this classification. Moreover, if the policyholder cancels the contract before maturity, deductions are made from the paid premiums depending on the elapsed time. The study evaluates the permissibility of such deductions under Islamic law and whether the remaining amount can be lawfully returned to the customer. The final part of the study examines the practices of insurance companies in Turkey offering this product. It is noteworthy that only T & uuml;rkiye Sigorta claims to operate in accordance with Islamic principles by investing collected premiums in participation banks and marketing the product as interest-free. Other providers do not make similar declarations. It is important to clarify that interest-free in this context refers to how the premiums are invested, not necessarily to the overall structure of the product. Currently, this product is not offered by companies in the Islamic (participation-based) insurance sector and is only available through conventional insurers. Among them, only one company affirms compliance with interest-free investment practices. Therefore, from an Islamic legal perspective, the product is deemed potentially legitimate only when offered under such terms.