Capital Wealth
Capital Wealth · The Letters · Faith-Based
Principal FirstThe Faith Test

Can a RILA protect your principal and still meet the Islamic principles on interest, gambling and shared loss?

Here are the principles, the contract measured against each one, and the record behind the buffer. The ruling belongs to your scholar.

Clients who invest by their faith keep asking me the same question about annuities: can a contract protect principal without breaking the rules they live by? It deserves a straight answer. The facts of the contract are mine to get right; the ruling is their scholar’s.

By Sean Anees Saifi · Capital Wealth ·
An hourglass on a wooden desk beside a stack of old books in a sunlit studyCapital Wealth · Principal first
A house under a dark storm sky, lawn and palms still lit by sun
Buffer segments
Shares the loss

The company takes the first slice of an index loss and you take the rest. No rate is promised in advance.

A stone viaduct of many arches standing over a still river in morning fog
100% protection
Ask your scholar

Your principal is guaranteed; a profit is not. Many scholars question any guarantee on capital.

An old bank passbook and a pen on a counter
Fixed segment
Out

A declared 3% on money handed over is interest by any definition.

The empty trading hall of a stock exchange at sunrise
The index underneath
Ask your scholar

Own it? Only the screened part, in the book. Be paid by it? Scholars differ, and section 04 lays out the question.

01The principlesInterest out · gambling out · shared outcomes in
“Allah has permitted trade and forbidden interest.”The Quran, 2:275
Morning light falling through a carved lattice window across a stone floorTrade, not interest
  1. RibaNo interest: no return fixed in advance on money handed over.The Quran, 2:275–279
  2. MaysirNo gambling: no gain that turns on chance or on betting against a price.The Quran, 5:90
  3. GhararNo excessive uncertainty: the terms are known when the contract is signed.Hadith, Sahih Muslim, on the gharar sale
  4. SharingCapital that shares in profit and loss is permitted; a guaranteed return is not.AAOIFI Shariah Standards on musharakah and mudarabah
02How a RILA worksA contract · an index · a buffer
Waves breaking against a stone seawall below a green headlandA buffer is a seawall · it takes the first slice

The buffer

The company absorbs the first 10% or 20% of an index loss. You take what is left.

100% protection

No loss from the index. The gain is capped: 42% over six years, 60% with the rider.

The term

One, two or six years. The money is committed for six, with 10% a year free to take out.

You own no shares and receive no dividend; the credit is a formula on the index level. Every segment and rate is on the calculator →

03The testSix questions, one principle at a time
A hand signing a contract at a wooden desk

Is the profit prearranged?

No. The credit is whatever the index did, and it can be zero.

No
Two partners reviewing papers across a desk

Is the loss shared?

On a buffer, yes: the company takes the first slice and you take the rest.

On a buffer
A trading floor under a wall of market screens

Is it gambling?

The money is committed for years and credited on the whole economy. Nothing to watch.

Held, not traded
One hand resting on another over an envelope

Is interest taken from the company?

Not by you. No fixed segment, and any credit labelled interest goes to charity.

Excluded
A city skyline rising out of fog

Is the index screened?

No. The S&P 500 holds banks, brewers and casinos. Two answers in section 04.

Ask your scholar
Glass jars of coins with blank tags, set aside in a row

What about zakat?

2.5% of the contract value on your valuation date, run with the book.

Handled
04The S&P 500Can we invest in it? Two questions, two answers
A city skyline rising out of morning fogThe whole market · and the part that passes

“Can we invest in the S&P 500?” is two questions wearing one name. Owning it is one. Being paid by it, inside the contract, is the other.

Owning it: not the whole thing

Under the standard screen, the one this firm publishes on its faith-based investing page, a company fails if more than 5% of its revenue is impermissible or its debt tops a third of its market value. On that screen the S&P 500 fails as a whole: conventional financials alone are about 12% of the index by weight, and roughly 300 of the 500 companies fail on activity or leverage. About 220 pass, and S&P publishes them as the S&P 500 Shariah; the SPUS fund tracks it. To own the market screened, that is the book: SPUS and single names checked on Musaffa and Zoya, with purification of the small interest income the funds report.

Screened book instead

Being paid by it: scholars differ

Inside the RILA the S&P 500 is a yardstick. You own no share of any bank, no dividend from a brewer reaches you, and the credit is an agreement with the insurer whose outcome follows a number: no promised rate, a loss shared on a buffer segment, held for years rather than traded. Scholars differ on a contract referenced to an unscreened index. Some hold that a gain measured by impermissible companies carries their taint and must be purified or avoided. Others hold that an agreement whose outcome merely follows a number is not ownership of what the number contains. No carrier offers a screened index on a RILA today. Ask your scholar the precise question, an index-linked credit with no ownership, no dividend and the loss shared, and if the answer is yes with purification, we compute the share from the index’s non-compliant weight and it goes to charity.

Ask your scholar

Meanwhile: the growth sleeve is the screened book, the RILA is only the principal sleeve, index segments only, and the open question sits in your file in your own words.

05Principal firstEvery rolling S&P 500 period since 1984
A white lighthouse on a rocky point above a calm sea at dawnPrincipal first
0losing six-year periods after a 20% buffer
43 of 433six-year periods lost before it, none by more than 20%
23 of 493one-year periods still negative after a 20% buffer, from 100
42%the six-year cap on the 100%-protection segment

Two costs that are not faith questions: the credit is price return, about two points a year behind the dividends, and the money is committed for six years.

06In the planThe book grows it · the sleeve protects it
A couple reviewing papers together at a kitchen tableSized by the date, not the fear
  1. Size by the date. Only the dollars that must be there on a date go in the sleeve.
  2. Index segments only. Never the fixed segment.
  3. Take no interest. Anything labelled interest goes to charity, receipt in the file.
  4. Zakat once a year, with the contract and the book on one sheet.
The Faith-Based books →
07Your callWe show the lines · you decide

We will not call a product permissible. That belongs to your scholar and to your conscience.

Scholars differ on insurance and annuity contracts, and many hold conventional insurance impermissible and point to takaful instead. This letter lays the contract against each principle so the question can be asked precisely. Bring the answer to your review; it goes in the file next to the plan.

Forest trails dividing below a snow-capped mountain at dawnYour call

If you want to walk through it with your own numbers, bring your statement and your scholar’s question to the review. We will size the sleeve by the date, not the fear.

— Sean

Sean Anees Saifi · Capital Wealth

Sources
  • The Quran, 2:275–279 on interest and 5:90 on gambling (standard verse numbering).
  • Hadith in Sahih Muslim forbidding the gharar sale.
  • AAOIFI Shariah Standards on partnership (musharakah), mudarabah, Islamic insurance (takaful) and shares (Standard 21); the screen thresholds as published on our faith-based investing page.
  • The S&P 500 Shariah index, S&P Dow Jones Indices; SPUS holdings count from the fund’s published list; financials’ index weight, May 2026.
  • Segments, caps and the rolling-period record: Principal® Strategic Outcomes rate sheet dated 06/15/2026 and Principal’s loss-size tables, S&P 500 01/1984–01/2026, as transcribed on our calculator page.

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; questions of permissibility belong to the client’s scholar. A registered index-linked annuity is a long-term contract issued by an insurance company: caps and participation rates limit the gain, buffers provide limited protection, withdrawal charges apply during the six-year period, credits are based on index price return without dividends, and guarantees rest on the claims-paying ability of the issuing insurer. Rates are from the carrier’s sheet dated 06/15/2026 and change; the rate in force is the one on the application date. Historical periods are shown for illustration; the product did not exist in them, and past performance does not guarantee future results.