Pre-paid Legal Services

A Pre-Paid legal service plan is similar to health insurance – the individual pays a fixed amount monthly in exchange for future benefits on and as-needed basis. The typical Pre-Paid plan provides legal advice and consultation over the telephone and may also include office consultations, document review, and the preparation of simple wills, letters or phone calls on behalf of the plan member. More extensive plans may include representation for civil and criminal matters such as traffic tickets, marital and family issues, bankruptcy and real estate. Based on the same concept of health insurance, Pre-Paid legal plans do for attorney and legal bills what health insurance does for hospital and doctor bills.

From an Islamic perspective, all forms of conventional insurance are unlawful, as they entail Riba, gambling or both. This has been explained in detail in many previous answers.

If a Pre-Paid legal service plan means that one periodically pays a fixed premium to a company, and the company caters for all of one’s legal costs if one were to be involved in a legal dispute, and if one did not incur any legal bills, the premiums paid would be lost, then this arrangement is nothing more than an insurance arrangement. Chancing and gambling (gharar or mukhatara) is something that makes contracts unlawful in Shariah. Contracts where the return or benefit is contingent upon the occurrence of some incident are not permitted. The premiums here are being paid for certain whilst the return is uncertain. One may lose all the premiums that one paid (if no legal costs were incurred) or may receive benefits in return (if one was involved in a legal dispute). The premiums paid to the company are actually money being placed at risk and this is what we call gambling.

Imam Abu Bakr al-Jassas (Allah have mercy on him) states:

“There is no difference of opinion between the scholars regarding the prohibition of gambling, and putting one’s wealth at stake (mukhatara) is a form of gambling.” (Ahkam al-Qur’an, 1/329)

Thus, if Pre-Paid legal plans operate in the manner explained above, then they would not be permitted Islamically. One will need to search for alternatives by inquiring from Islamic banks or Islamic financial institutions. However, if the Pre-Paid legal plan works in a different manner, please explain its procedure and we will then examine it, Insha Allah.

And Allah knows best