For the money that cannot afford to lose, a RILA offers a buffer against the market’s worst years. Before it earns a place in a faith-based plan it has to pass a stricter test than the rate sheet: the Ahmadiyya Muslim Community’s own guidance on interest, gambling and shared loss. This page puts the guidance in the Community’s words, applies it to the contract line by line, and shows the principal-first numbers from our own segment table and record.
The Community’s guidance on money has been consistent for a hundred and twenty years, and it is narrower than people expect. Interest is out. Gambling is out. Agreements that share the outcome, gain and loss together, are in. That is the whole test, and it is the test this page applies.
“Allah abolishes interest and causes charity to increase.” … “O ye who believe! fear Allah and relinquish what remains of interest, if you are believers.”The Holy Quran, 2:277 and 2:279 (Ahmadiyya numbering) · alislam.org, Selected Verses, “Prohibition of Interest”. The commentary there: riba is prohibited because it “tends to draw wealth into the hands of a small circle” and because “the lender in effect takes advantage of, and makes profit from, the need or distress of another.”
“With the exclusion of interest and gambling, the Shariah has permitted other agreements and responsibilities.”The Promised Messiah, Hazrat Mirza Ghulam Ahmad (as) · Badr, vol. 2, no. 10, 27 March 1903 · quoted in Al Hakam, “What is the Islamic ruling on insurance?”, 27 Nov. 2020
“The sharia defines interest as lending money to someone for a prearranged profit in return.” … “There is one or the other element of interest involved in every trade. This is why renewed ijtihad is needed in this age.”The Promised Messiah (as) · Al Badr, vol. 3, nos. 41–42, 1–8 Nov. 1904 · quoted in Al Hakam, “How can a Muslim navigate through a world full of interest?”, 25 Nov. 2022
“If a company lays the condition that the policyholder and the company will share the profits and losses, then insurance may be permissible.”Hazrat Khalifatul Masih II (ra) · Al Fazl, 7 Jan. 1930 · as rendered in Al Hakam, 27 Nov. 2020
Insurance agreements “free of the elements of interest and gambling” have become possible, on the condition that “nobody should take any interest from the insurance company on the contributions.”Majlis-e-Ifta recommendation, approved by Hazrat Khalifatul Masih III (rh), 23 June 1980 · Al Hakam, 27 Nov. 2020
Arrangements in which “capital is deployed on the basis of participation in both profit and loss are permissible.” Where only a profit is indicated and there is “no provision for sharing in loss”, the return is interest.Hazrat Khalifatul Masih V (aba) · guidance of 6 Nov. 2023 · Al Hakam, “Answers to Everyday Issues”, part 101
“If someone says ‘Now that the market has gone up, I will sell my shares’, or ‘Now that the market has come down, I will buy some shares’ and constantly remains occupied in keeping a keen eye on when a particular share in the market goes up or down from morning till evening, then this comes under gambling and one should refrain from doing this.”Hazrat Khalifatul Masih V (aba) · to the Sweden delegation, 13 March 2020 · Al Hakam, “Cryptocurrency and Islam”, 4 Feb. 2022
Islam promotes “share-holding – a contract where the lender of money will share in the outcome. If it results in a loss, he would suffer the loss and if it turns a profit, he will share in the profit.” Money does not “give birth to children”; it is an inert factor that needs human effort to earn.Hazrat Khalifatul Masih IV (rh) · Nasir Baagh, Germany, 11 Sept. 1993 · alislam.org, “Investment, Interest, and Islam”
One more line matters for the way this page is written. Al Hakam’s 2022 summary of the Khalifa’s counsel: do not create unnecessary difficulty by hunting for interest’s indirect trace in every transaction; avoid what is clearly prohibited; take the easier path where it is lawful and stay far from what is not. The test below is strict where the guidance is clear and honest where it is silent.
A registered index-linked annuity is a contract with an insurance company. You pay a premium. The company credits it, at the end of a term, by how a market index moved: the S&P 500, the Nasdaq-100, the S&P MidCap 400 or the Russell 2000. You own no shares. There is no dividend. There is, on the segments we would use, no promised rate.
Three parts do the work. A buffer means the company absorbs the first 10% or 20% of an index loss and you take what is left. A 100% protection segment means the company absorbs all of it, and you accept a cap on the gain in exchange. A cap or participation rate sets how much of the gain is yours. Terms run one, two or six years; money is committed for a six-year withdrawal-charge period with 10% a year free to take out. The full mechanics, every segment and the record behind them are on the calculator page.
The one segment we would never use. The contract also offers a fixed segment: 3% declared for a year, regardless of the index. That is a prearranged profit on money handed over, which is the Promised Messiah’s definition of interest, word for word. It is off the table in any faith-based allocation, and the test below assumes it.
| The question | What the contract actually does | Verdict |
|---|---|---|
| Is a profit prearranged? The Promised Messiah’s definition, 1904 | On an index segment, no. The credit is whatever the index did over the term, subject to the cap or participation rate. It can be zero. On a buffer segment it can be negative. Nothing is promised in advance except the shape of the deal. | Passes |
| Is loss shared, or only profit? Huzoor’s rule, 6 Nov. 2023 | On a 10% or 20% buffer segment the company takes the first slice of the loss and you take the rest: the exact condition Hazrat Khalifatul Masih II set for insurance in 1930. The 100%-protection segment is different: you cannot lose, but you are not promised a gain either, and you give up everything above the cap. That is savings without interest, which the 2016 guidance allows, not a profit-only scheme. | Passes Ask on 100% |
| Is it gambling? Huzoor, 13 March 2020 | The money is committed for the term and credited on the level of a whole-economy index years later. There is nothing to watch from morning to evening and no chance event to bet on. The company hedges its own promise in the options market; that is its business, not yours. | Passes |
| Is anyone taking interest from the company? Majlis-e-Ifta, 1980 | The insurer’s own reserves earn interest; that is how every insurer works. The 1980 condition is on the policyholder: take no interest from the company. So: no fixed segment, no interest-bearing holding account, and if any credit is ever labelled interest (a waiting-period fixed account, for example) it goes to charity, not to you. We write that into the allocation. | Handled |
| Is the underlying screened? Where the guidance is silent | The index is the whole S&P 500: banks, insurers, distillers and weapons makers included. You own none of them, and the credit is a formula on the index level, not a share of their profits. The Community’s guidance does not address index-linked crediting. We do not decide this for you; we put it in front of you and the Community’s scholars, and we keep the screened book as the core. | Your call |
| Zakat Huzoor, Al Hakam part 101 | Assessed on the contract’s value on your annual valuation date, at 2.5% once the nisab is met, exactly as we run it for the book. The surrender schedule does not change the obligation. | Handled |
Read together: a buffered index segment is an agreement that shares gain and loss, promises no rate, and cannot be traded from a phone. It sits on the permitted side of every line the Community has drawn. The open question is the index itself, and that is a question of conscience, not arithmetic.
Principal’s own tables, reconciled by us on the calculator page, cover every rolling period of the S&P 500 from January 1984 to January 2026. This is the record a protection sleeve is bought against.
| Segment | Term | Downside | Upside | Where it fits |
|---|---|---|---|---|
| S&P 500, 100% protection | 6 years | None from the index. Your principal is the floor. | Capped at 42% for the term; 60% with the 0.95% rider. | The dollars with a date on them: the withdrawals of the next few years, the money you cannot watch fall. |
| S&P 500, 20% buffer | 6 years | The company absorbs the first 20%. Since 1984 that has been every negative six-year period. | Uncapped, 87% of the index gain; 110% with the rider. | Money that can wait six years and wants the market’s gain with the record’s worst years cut off. |
| S&P 500, 20% buffer | 1 year | First 20% absorbed. 23 of 493 one-year periods still lost. | Capped at 8.5%; 10.5% with the rider. | A one-year parking place when the plan needs the money soon and the sukuk fund’s yield is not the point. |
Two costs are not faith questions but are real. The credit is the index’s price move, without dividends, historically about two points a year behind the total return. And the money is committed: a six-year withdrawal-charge period, with 10% a year free. That is why the sleeve is sized by the plan, not by enthusiasm.
A faith-based plan at this firm has one core and, where the plan calls for it, one protected sleeve beside it. The core is the North Star Faith-Based book at your size: the same sleeves and the same watch list as the North Star, every name checked on Musaffa and Zoya, a sukuk fund in place of Treasury bills, a Shariah-ETF core in place of the banks. The protected sleeve is the RILA, and it is built the way the test above requires.
If you want to bring a question to the Community, alislam.org’s Ask Islam archive holds the Fourth Khalifa’s recorded answers on shares, profit-sharing accounts and life insurance, and Al Hakam publishes the Fifth Khalifa’s current guidance in “Answers to Everyday Issues”. Bring the printed answer to the review. It goes in the file next to the plan.
Capital Wealth LG is an independent investment advisory practice. This page is education for a planning conversation, not a recommendation to buy any security or contract and not a religious ruling; the quoted guidance is reproduced from the Ahmadiyya Muslim Community’s published sources as cited and should be read there in full. A registered index-linked annuity is a long-term contract issued by an insurance company: caps and participation rates limit the gain, buffers and floors provide limited protection, withdrawal charges apply during the six-year period, credits are based on index price return without dividends, and all guarantees rest on the claims-paying ability of the issuing insurer. Rates shown are from the carrier’s sheet dated 06/15/2026, are declared by the carrier and change; the rate in force is the one on the application date. Historical index periods are shown for illustration; the product was not available during those periods and past performance does not guarantee future results. Zakat and purification figures are calculations we run with you, not rulings.