Regarding cell phones, we understand that you can sign up for a contract for 2 years where you pay a portion of the phone (sometimes none).And in that time span, if one were to die, that (contract amount) becomes unpaid debt. So would it be better to buy the phone outright (without a contract) to avoid a situation which I stated?
This is called buying in installments. I will just let you know that you will need to have a credit card and good credit to qualify for this offer. When I was buying my phone, this is what the salesperson told me. In any case, buying in installments is an issue where the Scholars differed. However, the majority of the Scholars are of the opinion that it is permissible as long as the buyer gets the product and owns it. Then he will pay the remaining sum as a debt in fixed installments.
Shaikh Bin Baz rahimahullah said:
“The most correct opinion on that is that it is permissible. This is what the majority of the People of Knowledge are upon. There is no harm in that. This is called buying in installments (بيع التقسيط). If the product is present with the seller and he owns it, then he sells it on credit in well-known installments to one who buys it for a less amount due to a need he has to fulfill from marriage or otherwise, then there is no harm in that. It is established in the Saheehayn from the Hadith of Aisha radiallahu anaha that the owners of Barirah [a slave] bought her in installments…”
I would advise just buying the phone up front without a need for this because it can only be done through credit. If you are not able, then the transaction is fine. Also, do not get any warranty as I translated Shaikh Ibn ul-Uthaymeen’s fatwa on that if you remember (as found here)
And Allah knows Best
Faisal Ibn Abdul Qaadir Ibn Hassan