4 Important Things to Keep in Mind while Buying Term Insurance

With the right term insurance plan in place, you can mitigate the degree of risk and secure the future of your family members and loved ones. The UAE insurance market is quite diverse and very often insurance seekers and unable to decide which plan to choose. To ensure financial security it is extremely vital to have a term insurance plan.

These plans mitigate risk and ensure financial security during phases of turmoil. Now the question arises on how to choose the right plan in UAE? To make sure that you choose the right plan that fulfills your insurance needs without adding a burden on your budget we’ve come up with 4 important points to ponder before buying term insurance plans in the UAE.

In this, we will shed light on important points to be kept in consideration while purchasing term insurance plans in the UAE. Furthermore, we will be sharing tips and tricks that will help you to choose the right term insurance plan in the UAE.

Sum Assured

One of the most important factors to be kept in consideration while choosing term insurance plans in the UAE is the sum assured. This is the amount your loved ones will receive in the case of any unfortunate event that leads to the disability or demise of the policyholder. While purchasing term insurance plan in the UAE it is vital that one assess their individual needs and requirement as it plays a major role in deciding the sum assured of a term insurance policy.

Some of the major factors that should be kept in consideration while choosing the coverage for term insurance plans in the UAE are the age of the applicant, outstanding financial obligations, financial responsibilities, lifestyle habits, future financial requirements, and inflation.

According to the thumb rule of insurance the younger you are the lesser you end up paying for insurance plans. However, if you have outstanding financial obligations such as a mortgage or car loan then your sum assured should be enough to cover the outstanding debts. Apart from handling the outstanding debts, it should be enough so that your family members and loved ones can make ends meet during the phases of financial instability caused by the loss of life of the policyholder.

Policy Period aka Term

The policy tenor also known as the term is one of the most important factors to be kept in consideration while choosing term insurance plans in the UAE. The primary objective of the purchasing term insurance plan is to mitigate the risks and replace the income of the insured in case of any unfortunate event that leads to the demise or disability.

Keeping the primary objective of term insurance plans in the center it becomes inevitable to be covered till the age of 55 or 60 as people typically to tend retire at this age. If you wish to enhance the security quotient you can opt for a term insurance policy that offers coverage till the age of 100. Insurance seekers should always remember that the younger they are the lesser they end up paying a premium for term insurance plans. Contrary to the first situation if you purchase a term insurance plan at the age of 55 or 60 you will have to pay comparatively very high premiums for the same plans. The term of these plans should be chosen on the basis of one’s individual requirement and needs therefore, assessment of needs turns out to be a vital factor while choosing term insurance plans in the UAE.

Claim Settlement Ratio

Another important factor while choosing term insurance plans in the UAE is the claim settlement ratio. Claim settlement ratio is defined as the ratio of the total number of claims processed by the insurance provider to the total number of cases submitted to the provider. Always remember the higher the claim settlement better is the performance of insurance provider from the consumer’s point of view.

Every year there is a report issued that depicts the claim settlement ratio of different insurance providers. Customers should try and opt for an insurance provider that has a high claim settlement ratio as it increases the chances of receiving the claim in case of any event that leads to the disability or demise of the policyholder.

Insurance Riders

Insurance riders enhance the protection quotient of the basic term plans by adding auxiliary coverage to the plan. Insurance seekers can assess their individual requirements and budget to choose the right insurance riders with their basic term insurance plan.

Some of the most common term insurance riders are an accidental death benefit, critical illness coverage, terminal illness coverage, waiver of premium rider, and disability benefit. Insurance seekers opting for term insurance riders have to pay an additional premium as the protection quotient of their basic plans is enhanced via riders.

In a Nutshell

As mentioned earlier term insurance plans are absolute when it comes to safeguarding and protecting loved ones against the strokes of uncertainties on the trail of life. With the above-mentioned points, it will become easier for insurance seekers to opt for the right term insurance plan in the UAE.