DOs and DON'Ts of Term Insurance in the UAE

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  | Published: 19 May 2020 | Last Updated On: 08 February 2021

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Term Insurance in UAE
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The oldest and also the simplest form of life insurance – term insurance provides the payout of the sum assured to the beneficiaries in case the policyholder passes away during the term of the policy. Term life coverage is among the most affordable types of life insurance. It can also act as a risk cover plan that helps in minimizing the different types of financial risks. It also helps in taking care of any due or unpaid liabilities that may arise because of an unfortunate incident.

Term Insurance

With term insurance in UAE, a lump sum amount i.e. the sum assured is paid to the beneficiaries on your policy contract in case of your demise. Some of the insurance providers also offer provisions via which you can opt for the sum assured to be paid out in the form of monthly payouts or earnings with the lump sum amount. On top of this, you can also add on riders to your base policy to enhance the scope of coverage and providing benefits in case of any critical illness, disability, or accidental demise.

Benefits of a Term Insurance in UAE

Some of the common benefits that a term insurance policy provides are summarized below:

High Scope of Coverage with Affordable Premiums

This is quite the benefit of having a term insurance policy. A term plan helps you by providing wide coverage at affordable and reasonable premium charges. The premium charged on term insurance in UAE is even potentially lesser if the coverage is bought at a younger age.

Death Benefit

In case the policyholder faces an unexpected and sudden demise, the beneficiaries of the policy can obtain the fixed sum assured in the form of a death benefit.

Add-on Riders

Term insurance in UAE allows policyholders various additional riders that can be added onto the base policy by paying an additional premium. These add-on riders help in enhancing the scope of coverage offered by a term policy. Some of the common popular riders that can be included in a term coverage policy are an accidental death benefit, critical illness rider, waiver of premium benefit, among many others.

Maturity Benefits

In the case of a real-time situation, the term life policy has no maturity benefit associated with it. However, there are certain categories of term plans offered by some of the insurance providers such as Term Return of Premium Plan i.e. TROP that offer a return of the premium payments as maturity benefits.

Security and Simplicity

Term insurance plans are the most simple and secure life coverage option. They allow you to provide your family and dear ones the much-needed security net in case you are no longer around. Moreover, they have simple components that include honoring the premium payments and availing life coverage.

Coverage for Your Liabilities

More than often, people tend to take on a lot of liabilities during their lifetime, these can be for housing, a new car, among many other things. These liabilities require the borrower to make timely payments and clear off the debt and if something unfortunate were to happen, then the sum assured received as a death benefit obtained by your beneficiaries can be used to pay off any outstanding liabilities.

Dos and Don’ts for Buying Term Insurance in UAE

There are few basics dos and don’ts that one must take care of while out there seeking to buy term insurance in UAE.

Dos While Buying Term Coverage

Be Sure Of Your Requirements

The first place to begin with, you should think and be absolutely certain about what your requirements majorly are, why you need a term insurance plan in the first place, and what your expectations are from term insurance in UAE.

Research Well and Take Proper Advice

You should seek professional advice about term plans and also carefully research all the options available thoroughly. Also, you should be open-minded and at the same time cautious when you are gathering information about these plans such as what are the various premium payment options that are offered, what are the add-on riders available, among others.

Careful with the Application Form

The form for buying a term insurance policy should be read and filled up very carefully. You should be sure to put in the correct details on the form and understand all the questions properly in order to answer them correctly. Make sure to check out the terms and conditions that are mentioned in the policy document. Also, keep in mind that generally there is a declaration regarding the effect of the plan in the form.

Future Reference

You should make sure to keep a copy of your signed application or proposal form along with any other declarations that have been made by you in your form. This copy is for you to keep in your records and can be handy for any future references.

Insurance Provider’s Reputation

You should make it a point to check the reputation as well as the image of the insurance provider from which you are planning to buy term insurance in UAE. You can access the internet for various customer experiences and reviews. It is a good idea for you to avoid buying a term plan from an insurance company with a low claim settlement ratio or one that is involved in numerous disputes.

Don’ts While Buying Term Coverage

Don’t Fill Any Wrong Information

You should make it a point not to misstate any information on the form while filling it for buying a term plan. Any input of incorrect information can lead to the insurance provider rejecting your claim at a time when you need it the most. Moreover, the premium payments made by you will not be refunded and you’ll find yourself to be in a situation of distress.

Don’t Sign a Blank Application

You should avoid signing any sort of blank application forms. Doing so can create problems for you in the future.

Don’t Leave Your Form Incomplete

You should make sure to fill the application form for term insurance in UAE by yourself. You should also avoid leaving any column of the form blank.

Don’t Delay Your Premium Payments

Furthermore, you should avoid causing a delay in your premium payments for your term plan as this can cause the insurance provider to charge you a late payment fee.

Wrapping it up!

In life, there will always be an element of risk or concern that exists and which leads to the ‘what if’ element in our minds. A term plan is designed to cater to this ‘what if’ question in our mind by providing affordable and simple solutions for the same.

With the term plan’s affordability and riders available for enhancing the coverage, it can prove to be the best hedge against life’s risk element. However, it is very important for you to choose term insurance in UAE carefully as per your needs and only after you have done thorough research.