Dr. Monzer Kahf, a prominent economist and counsellor states: The issue of insurance is not basically interest (although some life insurance contract has built in interest (the contract that gives you the face value after the passage of a given number of years). It is the ambiguity in the contract (Gharar) that matter. It is manifested in the fact that one does not know when death is going to happen; therefore, how many premiums are going to be paid.

Based on these points some scholars argue that the contract is not permissible on the ground that this ambiguity is intolerable. Some other scholars argue that it is rather permissible because of two reasons: 1) the amount of ambiguity is in fact not high because of the application of the probability theory and large numbers, it becomes rather a contained ambiguity and 2) because this contract is very useful or rather necessary as in your case. I belong to this view and always give the opinion that whenever the insurance contract has no built in interest, it is permissible. Life contract that has no interest is that which does not give a payment of a given amount after a given number of years. If your contract is not like that, it is usually called term life insurance and it is permissible.”