Understanding the Main Types of Life Insurance in UAE

Many types of life insurance policies are available in the market but term and permanent life insurance are among the most salient ones.

Term insurance is the pure plan, whereas permanent insurance upholds various types. Let’s understand the basics of different types of life insurance policies in the UAE.

How Many Types of Life Insurance Are There?

Life insurance policies can be classified into various types —

• Term Insurance Policy

It is a basic life insurance plan that covers your family if you pass away before the policy tenure. It features death benefits along with some additional rider options.

Typically, it’s a cost-efficient insurance plan that protects your family financially. It’s usually the most affordable one as it only provides death benefits.

• Unit Linked Insurance Plans (ULIPs)

This life insurance plan offers dual benefits to the policyholder. It combines the benefits of life insurance and investment. However, risk is also associated here as it’s a market-linked plan.

Under ULIPs, a part of the premium amount is secured for your life coverage — the rest is invested in a range of funds.

• Whole Life Insurance

It’s one of the types of permanent life insurance that covers your whole life up to 99 years. It may feature two main benefits — guaranteed death benefit and cash value.

With a whole life insurance policy, you can ensure financial protection for your family after your demise. Plus, with the cash value, you can borrow or withdraw money for a lifetime.

• Endowment Life Insurance Plan

Endowment insurance plans offer life cover and maturity benefits. They secure your family after your death and also work as an asset if you outlive the policy tenure.

If you pass away during the tenure of your endowment insurance policy tenure, the nominee will get a sum assured. If you’re alive when the policy matures, you will receive a sum assured along with some additional bonuses.

• Money-Back Plan

This is one of the types of life insurance policy in which a policyholder receives survival benefits in the form of regular income. At the end of the term, they get a lump sum amount along with some additional bonuses.

The survival benefit is a periodic payout of the sum assured amount that can be monthly, quarterly, or yearly. However, in case of the death of the insured before policy tenure, a sum is paid out to the beneficiaries.