Prudential Offers Sharia-Compliant Life Insurance in the United States

IQRAISLAMI.MY.ID -Prudential, one of the largest life insurers in the United States, has announced plans to launch a dedicated Sharia life insurance business there later this year. 

The new product line will be based on Wakalah, or agency model, in which Prudential acts as an agent between its customers and Sharia-compliant financial institutions in other parts of the world. 

According to Prudential’s announcement, the launch of this new service will make it the first U.S.-based insurer to offer Sharia-compliant products through the agency model in North America or Europe.

What is Sharia?

Sharia is a set of principles that govern every aspect of a Muslim's life. The primary source of Islamic law, the Quran, and its accompanying text, the Hadith, provide a framework for people to live by on daily basis. 

The five foundational pillars are the creedal statement that there is no god but Allah and Muhammad is His messenger; praying five times each day; giving to charity; fasting during Ramadan; and undertaking a pilgrimage to Mecca at least once in their lifetime if they have the means. 

Sharia covers various topics including food and drink, dress, medical care, sexuality (including modesty), business dealings and contracts, political relations and social interaction. 

It has traditionally been the domain of scholars educated in traditional Islamic sciences (ulama) to decide how Muslims should behave on these issues. 

According to estimates from Abu Dhabi Gallup Center in 2011 Islam represents about 24% of all world population as Muslims make up one fifth of total world population as it stands today. 

With over 1.6 billion followers or 23% of the global population there is currently an increased focus on providing appropriate products to help meet customer needs while adhering to religious values. 

As such, Prudential Group recently announced plans to launch a dedicated Sharia-compliant life insurance product line in the United States.

Why is it important?

The global Islamic population has seen significant growth over the last few decades, and this population is expected to continue growing. 

In 2011, there were 1.6 billion Muslims worldwide, and by 2050 that number is projected to reach 2.7 billion people. 

Prudential is an industry leader, offering general insurance products across a variety of segments since 1875, so it makes sense for them to offer this service to their customers who are looking for a new way to protect themselves and their families from life's uncertainties. 

In addition, according to the International Monetary Fund (IMF), Islamic banking assets reached $1 trillion USD in 2013. 

Considering this recent data on Islam and economic trends on a global scale, now seems like a good time for Prudential to launch its Sharia life insurance product in America. 

Along with financial institutions such as HSBC, they are positioning themselves to become experts in all things Sharia. 

With these innovations coming out of North America, it could have an impact around the world - which would be great news for everyone. 

2) Why did Prudential decide to release a Sharia compliant life insurance business in the US? The global Islamic population has grown significantly over the past few decades and is projected to keep increasing, so it’s not surprising that Prudential wanted to provide its services for those individuals seeking this type of protection.

A brief history

The Islamic religion has a set of principles, or guidelines, that govern how Muslims should live their lives. One of these principles is Al Mal Al Ahlaam (المل الأحلام), which means that one should not consume interest on any loan and investment. 

In order to comply with this principle, Prudential created a dedicated life insurance business for American Muslims who want to buy life insurance without being charged interest. 

It is important to note that the practice of Al Mal Al Ahalaam doesn’t have anything to do with your religious affiliation. 

If you are Christian, Hindu, Jewish or atheist, you can still enjoy the benefits of this service. And there's even more good news: You don't need to be Muslim to take advantage of it! Those who are Christian, Hindu, Jewish or atheists can also get involved. 

Best of all, you will be able to avoid paying interest rates so that your money goes towards building up your retirement fund instead. 

How much does it cost? Just like any other life insurance policy, the premiums are based on an individual’s age, health and lifestyle. 

However, unlike most life insurance policies, the premiums are fixed. Meaning that when you renew your policy each year, the same rate applies regardless of how old you are or what your health status may be. 

As with any other type of life insurance product, the costs vary depending on an individual's age and level of coverage - but in general they're pretty reasonable.

In modern times

In a recent announcement, Prudential has been approved as an insurer to offer coverage for life insurance that complies with Islamic law. 

This is a big step for not only the company but also for Muslims living in America who are looking for life insurance that meets their specific needs. 

The company is offering two different types of life policies: one where the death benefit is paid out at a fixed amount, and one where it’s paid out as a lump sum. Both of these options comply with the tenets of Sharia law.

Prudential's move into this market will make it more accessible for Muslims and Muslim businesses, which may have previously had difficulty finding a provider they could trust. 

There will be many challenges going forward, including making sure these products can meet demand in all 50 states. 

There are around 3 million Muslims living in the U.S., so according to some experts, this should be a profitable venture for both Prudential and those seeking coverage under its new product offerings. For example, a family of four would need to pay about $1,400 annually for these policies. 

However, if someone dies from something other than natural causes during this time period (let’s say they were in an accident), then the policy would pay out the full face value—a good thing since suicide isn't permitted under Islamic law.

What does this mean for me?

If you are living in the U.S. and want to purchase life insurance that adheres to your religious beliefs, then Prudential has created a new product just for you. 

The company's new PURE ACCORD policy is designed to be compliant with Islamic principles and can be purchased by Muslims as well as non-Muslims. 

To make this possible, it does not include any gambling products, alcohol consumption or pork eating as factors that would invalidate the policy. 

It also does not invest in interest-bearing investments such as bank accounts or bonds that provide financial returns from interest generated from loans. 

As such, Muslim customers will not have to worry about any investment or business activities violating Islamic law while benefiting from an affordable life insurance plan. 

The product offers coverage ranging from $10,000 to $1 million at three different price points - Basic ($35 per month), Preferred ($59 per month) and Elite ($99 per month). 

Along with the traditional death benefit payout, these policies also offer additional benefits like income replacement of up to one year after the policyholder’s death. 

The launch of PURE ACCORD comes amid a number of efforts by insurance providers who are eager to tap into America's burgeoning Muslim population which is estimated to grow from 1% today to 2% of total population by 2050 according to recent estimates. 

We're always looking for ways to meet the needs

of our customers, said Ed Horne, President of Life & Retirement Solutions at Prudential Financial, and our growing Muslim customer base is seeking more choices when it comes to their faith. 

There are still no current projections on how many people will actually sign up for PURE ACCORD but representatives from Prudential believe there could be significant demand.