Insurance Policy in UAE: Compare & Buy Insurance Online in Dubai
What is insurance?
Life is an uncertain trail, none of us knows what is about to happen the very next moment. Contingencies lead to losses that are not only emotional but financial as well. In order to safeguard and protect your loved ones, insurance is an absolute must. Insurance policy is an agreement between two parties’ i.e. insurance provider and the insured, that ensures financial security in case of any misfortunate event that might lead to the demise or disability of the policyholder.
The insured (policyholder) pays a premium periodically for the services that are offered by the provider. The primary objective of getting insurance is to protect an individual and their loved ones from bearing financial loss and therefore insurance policies are considered as risk management tools. Insurance policies in UAE safeguards families of the insured from phases of financial hardships.
Role and importance of Insurance
Insurance can be seen as an effective tool that mitigates the risk of loss to property and life. Insurance is an important contributing factor in promoting economic growth as it helps to stabilize the functioning of various processes. The importance of insurance policies have been mentioned below
- Provides security and safety
Insurance provides financial cushioning and reduces the extent of uncertainties in human life and businesses. Insurance in UAE provides extensive coverage against sudden losses and offer financial assistance to loved ones of the insured after the demise of the policyholder.
- Generates financial resources
Insurance policies generate a pool of capital by accumulating premiums from different applicants. This pool of capital is later invested in government based securities that generate financial resources. The financial resources are eventually used for improving the economy of a country which creates employment opportunities for citizens of a country.
- Encourages savings and healthy financial habits
Insurance in UAE not only provides protection against uncertainties and potential risks but also acts as an investment channel. Insurance in UAE enables systematic savings by the virtue of paying regular premiums. Purchasing insurance policies modify the scope of savings by inculcating healthy financial habits of regular savings.
- Medical assistance and support
Medical insurance is an absolute must in managing health-related issues. Lifestyle disorders and stress have led to a substantial increase in medical issues. Medical insurance policy in UAE is used to hedge against the risk of an uncertain loss or contingency.
Components of Insurance
Individuals looking forward to buying insurance should emphasize on gaining a firm understanding of concepts and components of insurance in UAE. Before buying insurance policy one should research the market properly and compare insurance in UAE to select the plan that fulfills all the requirements at the lowest cost.
There are four crucial components of insurance policies in UAE, they are as follows-
The premium of an insurance policy in UAE is the cost of services that are offered by the provider. The premium of an insurance plan is typically broken down into monthly installments that make it easier for the insured party to make the payments. Premium amount varies from provider to provider and plans to plan and depends on various factors. These factors include age, health status, and smoking status of the applicant.
- Cover Amount
Cover amount of an insurance policy refers to the total amount that is payable by the policy provider in case of any unfortunate event leading to disability or loss of life of the insured party. The cover amount and premium of the insurance plan are directly proportional to each other i.e. when the cover amount increases the premium for the policy also increases.
- Policy period
The policy period of insurance plans refers to the time horizon for which the insurance policy is valid under the name of the insured party. The policy period is applicable only to certain types of insurance products like term insurance, car insurance, auto insurance, etc.
The deductible is an amount that is supposed to be paid by the insured party before the insurer releases the cover amount. Deductible are applicable based on the type of policy and insurer.
Types of Insurance
As mentioned earlier insurance, in general, is an extremely diverse segment and includes different types of insurance products. Broadly insurance is classified into two categories-
- Life Insurance
- General insurance
Life insurance is one of the most basic and most selling types of insurance products available in the market. Life insurance is a legal contract between the insured and the insurer that provides financial compensation in case of the demise or disability of the policyholder. Life insurance helps you to secure the future of your family financially even when you won’t be around to look after them. Individuals can either make a lump-sum payment or periodic payments to the provider while buying insurance in UAE. The amount payable by the insured to the provider is called a premium.
Depending on the utility and application, life insurance has been classified into the following categories-
Term insurance is the most basic form of life insurance that covers the insured party for a pre-defined specific period. There is no maturity benefit in the case of term plans. The only benefit in case of term insurance is a lump-sum amount that is paid to your family in case of any misfortunate event.
Whole life insurance
Whole life insurance plans cover the insured party for the lifetime. Your nominees would receive a death benefit after your demise.
Endowment to term plans, endowment plans are valid for a certain period of time. A lump-sum is paid to the nominees of the policy after the demise of the insured. In case the insured party passes away the period of insurance then they are entitled to receive maturity benefits.
Money back policy
These are slightly different from conventional insurance in UAE. A certain percentage of the sum will be paid at fixed intervals throughout the validity of the insurance as a survival benefit. After the policy expires, the policyholder receives the remaining balance as a maturity benefit. In case of the demise of the policyholder during the policy period, the nominees are entitled to receive a death benefit irrespective of the survival benefits.
Unit linked-Investment plans (ULIP’s)
ULIP is an integration of life insurance and investment plan. The premium paid by the insured is broken down into two parts one is invested in equity and debt funds and the other goes for the premium of your insurance.
Child plans focus on providing financial security to the child/children of the insured. In the event of the demise of the policyholder, nominees i.e. children of the policy are entitled to receive a lump-sum amount. Furthermore, the cover is paid in the form of installments to provide a steady flow of income for your child/children.
Pension/ Retirement Plans
Pension plans help to build a corpus for your twilight years. As per the choice and convenience of the policyholder you can get regular pension after you retire from your job. In case of death, your nominees are entitled to receive a death benefit.
General insurance is a legal contract between the insured and the insurer that provides financial compensation on all sorts of economic losses except for death. The basic difference between general and life insurance is that it insures everything apart from life. The primary utility of general insurance in UAE is to provide compensation against financial losses due to liabilities. This may include liabilities related to house, car, travel, health, etc.
The insurance provider assures the insured party to provide coverage against damages to vehicle, health, property, due to natural calamities, theft, burglary, war, fire, riots, etc. In other words, general insurance is different from life insurance and offers financial cushioning for all sorts of assets against damage and losses.
Here’s a quick rundown on different types of general insurance broadly available in the UAE-
Health insurance covers the medical costs in case of hospitalization due to accident, injury, or illness. Health insurance plans either pay or reimburse the medical expenses incurred during the treatment of the insured party.
Motor insurance is meant to protect your vehicle against potential risks. Motor insurance includes cars, bikes, trailers, trucks, etc. Motor insurance is another type of general insurance that offers financial protection to your vehicle against losses due to accidents, fire, theft or natural calamities.
Travel insurance provides financial compensation against liabilities arising out of medical or non-medical emergencies during the insured parties’ travel abroad or within the jurisdiction.
Home insurance as the name suggests covers damages to your residential property due to natural calamities, threats, war, etc. It covers liabilities that might arise due to theft, burglary, floods, or sabotage. Home insurance not only protects your house externally but also takes care of valuables within the property.
How to buy Insurance in UAE?
The market today is filled with multiple insurance providers that offer specialized customizable plans for customers. Like almost every industry insurance sector has also evolved due to digitization. Traditionally insurance was sold offline and required tons of paperwork. In today’s era digitization has allowed customers to compare insurance online in UAE. Followed by comparison individuals can purchase the best insurance in UAE.
This segment of the article sheds light on how to buy insurance in UAE. One can follow the simple four-step approach to get insurance.
Step 1. Identify your requirement
The first and foremost step while buying insurance in UAE is to assess the requirement. Buyers should start off by getting all the important details. The initial assessment is extremely crucial in choosing the right insurance in UAE.
Step 2. Compare Insurance in UAE
Once you are done with gathering all important information the next step is to look for the best plan. Buyers can compare insurance online and select the plan that suits their requirements at the lowest cost. Buyers should always lay emphasis on choosing a plan that meets their instead of the premium of the plan.
Step 3. Pick the correct plan
After making a valid comparison buyer can select the insurance plan online or offline. Comparing and buying insurance can be done very easily online.
Step 4. Pay your first premium
After choosing the correct plan, buyers can fill in the application and pay their first premium that can be done online or offline as per convenience. Paying your first premium officially enrolls the applicant into the insurance plan and ensures financial security.