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Customer Inclination Shifting towards Term Insurance amid COVID-19

By Kapil Dwivedi
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The novel coronavirus has completely transformed our day to day life, right from working at homes to new health care norms to online classes, the new normal is here. Back when the first case of the virus was discovered in the city of Wuhan, located in the Hubei province of China none of us had even the slightest idea about the extent of damage this micro-organism would cause to mankind.

After the epidemic turned into a pandemic several countries went into lockdown to prevent the spread of this virus. Imposed lockdowns impacted our day to day life and forced us to stay confined in our homes. Working from home turned out to be the new trend, the entire education system was inclined toward online services, and the situation was similar for the insurance market.

Within the past few decades, there has been a substantial transition in the customer base shifting from offline services towards online services mainly due to increasing popularity and ease. This process was accelerated at an exponential pace after the pandemic. Not just the mode the purchase was changed but there was a quite evident change in the product choice of customers as well. More and more customers started investing in term insurance to safeguard their loved ones against the strokes of uncertainties in the UAE.  

In this thread, we will take a closer look at the shifting gravity of insurance products from life insurance to term insurance.

Term Insurance

Term insurance is the most basic and conventional form of insurance that is designed and developed purely for the purpose of risk mitigation. These plans are affordable, user-friendly, and flexible and allow the user to ensure financial security for their loved ones. The best part about term insurance plans is that these plans protect our loved ones and provide a guaranteed payout in case of any unfortunate event leading to the demise of the policyholder.

The pandemic has resulted in shrinking incomes across the globes making it difficult for people to invest in insurance products. However, due to the affordability and flexibility of term insurance plans, instead of choosing comprehensive, heavy-duty insurance plans people are switching to basic term plans.

Shifting Gravity of the Insurance Market

According to statistics published by policy bazaar. ae the total number of inquiries about term insurance plans has doubled between March and May making it the blooming period for providers in the region. Based on the statistics and inquiries it became quite evident that there is a lack of product knowledge and understanding amongst the common public. 

The statistics published by Policy Bazaar UAE provide a clear insight on the current scenario in the insurance market and the various reasons that led to an exponential rise in the number of term insurance plans sold amid COVID-19.

Before we dive deep into the reasons let us take a closer look at the statistics. Here’s a rundown- 

  • Only 20% of the total participants in the survey were aware of the fact that term insurance plans do not cover diseases falling in the category of a pandemic such as COVID-19.
  • Approximately two-thirds of the total participants had never purchased any type of term insurance
  • A staggering 38% of the total participants did not invest in term plans simply because there was no return component associated with these plans
  • 31% of the total participants were reluctant to purchase term insurance plans in the UAE because their families were residing in a foreign country

The Right Product

The data stated above explains the behavior of customers in the UAE and the shifting gravity towards the term insurance side. Clearly, there is a poor understanding amongst customers in the UAE when it comes to analyzing and choosing products based on their needs.

In order to counter this problem and get a better understanding of insurance products, customers can review, assess, compare, shortlist and finalize the right insurance product. Comparing insurance allows users to choose the right product that not only fits their budget but also fulfills their requirements.

If you are looking forward to buying a product that protects you and your loved ones against illnesses and pandemics then you should opt for a comprehensive health plan that provides adequate coverage at the right premium. However, if you are looking for a plan to mitigate risk and ensure a smooth future for your family then term insurance is the right choice for you.

In a Nutshell

The UAE insurance market is witnessing a prominent change due to the pandemic that will eventually subside with things getting back to normal. However, the pandemic has taught us an important lesson that human life is fragile and it is extremely important to protect the future of your family when you’re not around. With the right insurance plan, you can mitigate the degree of risk and take care of your loved ones on the uncertain trail of life.