How Life Insurance Is Related to Investment Plans in Dubai

  | Published: 01 October 2020 | Last Updated On: 08 February 2021

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With the increasing financial awareness in the UAE, many people want to attain something in return when they invest their hard-earned money in any financial instrument. This is one of the main reasons why options such as mutual funds and equity are very famous now these days in the country. This same mindset of creating high returns extends to life insurance as well.

Yes, you read it right.

Life insurance is not only limited to offer life cover and protect the future of your loved ones financially in your absence but also it has an investment component that can help you in building a corpus.

How life insurance is related to investment in Dubai and other Emirates? How can a life insurance plan be good for investing? Will it offer high returns just like other financial instruments? To know the answer to all these questions, read this article further.

What is Life Insurance all about?

Life insurance is an agreement between the insurance company and the policyholder where he/she pays some specific amount of premium to the insurance provider and in return, gets life coverage for a fixed sum assured amount. God forbid, if in case the insured die within the tenure of the policy, the insurer will pay the sum assured as a death benefit to the beneficiary(s). In this way, it helps the family members of the policyholder to fulfill their various financial needs even when he/she is not around.

In addition to this, it is a great investment component that offers good returns on the premium amount paid during the policy tenure. Some of the life insurance polices in the UAE offer investment benefits upon the maturity of the insurance policy to build a corpus.

Top 3 Life Insurance Plans That Are Related to Investment

There are many life insurance plans available in the UAE which include term insurance plan, Unit-Linked Insurance Plan, Whole Life Insurance Policy, endowment plan, Money-Back Insurance Policy, Child Insurance Plan, and Retirement Plans.

But with the life insurance products such as term insurance plan, if you outlive the policy tenure, neither you nor your family members will get any benefit. However, there are some life insurance investment plans that ensure that get some return even if you outlive the policy tenure. Following are some of the best life insurance plans that offer great returns in addition to the life cover:

1. Endowment Plans

If you’re looking to get fixed returns from your investment in the life insurance plan with high life coverage, then an endowment plan can an ideal option. It is basically a fixed term plan where you get the maturity benefit in addition to the accumulated bonus at the end of the policy term. However, if the insured dies during the tenure of the policy, the nominee will get the sum assured. Henceforth, this life insurance plan fulfills both purposes insurance as well as an investment under just one single insurance policy.

2. Whole Life Insurance

A whole life insurance policy or called a permanent life insurance policy covers an insured for his/her entire life provided the insurance premiums are paid. The sum assured is decided at the time of buying policy and it is paid to the nominee upon the death of the insured. Generally, the maturity age is 100 years and if the policyholder dies before this age, the nominee receives the sum assured. But, if the policyholder survives the policy term, the insurance company pays the matured endowment coverage to the insured.

3. Unit-Linked Insurance Plans (ULIPs)

Unit-Linked Insurance Plan, popularly known as ULIPs combine life cover and wealth creation under one insurance policy. Under ULIPs, the insurer will invest some portion of the premium towards life insurance and the remaining amount is invested in equity, debt, or a mixture of equity/debt of your choice.

Moreover, ULIPs specifies a death benefit- the sum assured will be paid to the beneficiary if the policyholder dies during the policy term. If the policyholder survives the tenure of the policy, he/she will get the maturity amount. Well, this will be the amount that is generated by the ULIPs investments in equity and/or debt. From children’s higher education and wedding to retirement planning, the returns from Unit-Linked Investment plans can help you attain your long-term financial goals.

The Bottom Line

As you can clearly see, life insurance is related to investment plans in Dubai and all other Emirates. There are several life insurance policies that can provide considerable returns too in addition to the life cover. Thus, you can opt for any of the life insurance plans as per your insurance and other financial needs.