Life Insurance Dubai

One can never fully prepare for life's unpredictable twists and turns. However, insurance, specifically life insurance, presents an astute strategy for managing these inherent life risks, providing a safeguard for both you and your loved ones. 

In the bustling, cosmopolitan city of Dubai, understanding the ins and outs of life insurance becomes particularly important. With numerous insurance providers present in Dubai, knowing the fundamentals of life insurance becomes necessary to make an informed choice. 

This article will serve as your comprehensive guide to 'Life Insurance Dubai', shedding light on its features, operations, application process, and the factors influencing its premium. By delving into its basics, we will equip you with the necessary knowledge to make an informed decision about your life insurance coverage, creating a solid foundation for your family's financial future.

What is a Life Insurance?

Life insurance can be defined as a legally binding agreement between an individual who holds the policy and an insurance establishment. This arrangement necessitates the policyholder to contribute payments, known as premiums. In return, upon the policyholder's demise or after a predefined time frame, the insurer disburses a specified sum of money. 
This monetary value, often referred to as the 'life cover', plays a pivotal role in securing the financial stability of the policyholder's family. It provides them with a substantial amount of money in the unfortunate event of the policyholder's passing. 

In addition, numerous life insurance policies come with a provision for a 'maturity benefit'. This refers to the sum that the insured party receives at the conclusion of the policy term. 
All in all, life insurance serves as a safety net, supporting your family's future financial requirements and creating a financial cushion that lasts beyond your lifetime.

How Does Life Insurance Policy Work in UAE?

Life insurance policies in the UAE (including Abu Dhabi and Dubai) serve a dual purpose. They not only deliver life coverage for financial support to the policyholder's family in their absence but also facilitate the achievement of various financial goals — children's education, funding a wedding, purchasing property, and securing a steady income post-retirement.

Here's a simplified look at how life insurance functions in the UAE:

Step 1: The initial step involves the policyholder paying a premium to the insurer. This is essentially the price that the policyholder pays for the security provided by the insurance.

Step 2: The next phase guarantees that the insurance provider will deliver a predetermined sum, known as the sum assured, to the chosen beneficiary if the policyholder passes away during the policy term. This ensures the financial well-being of the policyholder’s family in their absence.

Step 3: The final stage occurs when the insured party survives until the end of the policy term. Here, a payout, known as the maturity benefit, is made to the policyholder. However, this depends on the specific nature of the policy, as not all life insurance plans offer a maturity benefit.

Why Should You Buy a Life Insurance Plan Dubai & UAE?

Life insurance serves numerous purposes beyond simply providing a payout after one's death. Here are some compelling reasons why securing a life insurance policy in Dubai is a prudent decision - 

Ensuring Financial Security: Life insurance can ensure your family's financial stability even if you encounter an unforeseen circumstance. It helps your beneficiaries manage the financial impact of such a loss.

Compensating for Lost Income: A substantial death benefit paid out by life insurance can substitute the income lost due to the policyholder's passing, mitigating the financial burden on their family.

Settling Debts and Final Expenses: With life insurance, you can ensure that any pending debts or final expenses, including funeral costs, are covered. This saves your family from shouldering this financial burden in case of any unfortunate circumstance.

Funding Your Children's Education: Certain life insurance policies offer excellent avenues to allocate funds for your children's educational requirements to ensure that their academic future is secure.

Facilitating Business Continuity: For a business owner, life insurance can supply critical financial resources required to initiate or sustain the business in their absence.

Creating Investment Opportunities: Some life insurance policies with cash value allow policyholders to withdraw or borrow against their policy, opening up potential investment avenues. However, it’s worth remembering that these loans must be repaid on schedule.

Offering Peace of Mind: The mere presence of a life insurance policy can bring a sense of tranquility, as you would be knowing that your family's financial future is protected.

Assisting in Estate Planning: If an individual has an estate plan, life insurance can ensure that all their final wishes, including special bequests to loved ones, are carried out smoothly.

Providing Support in the Event of Critical Illness: Life insurance isn't solely about protection after death — it can also alleviate financial stress if you face a serious illness. Policies with critical illness cover can offer financial coverage in such situations, which can be beneficial with respect to treatment and recovery. This can make your life more comfortable even in challenging health circumstances.

Types of Life Insurance in Dubai and UAE

Each life insurance policy offers unique features and benefits that cater to different financial goals and needs. 

Here are the 5 key features of the main types of life insurance in the UAE - 

Term Insurance Plans

• Provide death benefit if the policyholder passes away within the policy term
• Cost-effective and independent of market fluctuations
• Offer financial protection for the policyholder's family in case of the policyholder's untimely death
• Don’t offer any maturity benefits
• Coverage ends if the policyholder outlives the policy term

Unit Linked Insurance Plans (ULIPs):

• Meld insurance and investment into a single plan
• Part of the premium goes towards life cover, while the rest is invested based on the policyholder's risk tolerance
• Policyholders receive the fund value as a maturity benefit if they survive the policy term
• Investments can fluctuate based on market conditions
• Provide both death and maturity benefits

Endowment Insurance Plans

• Combine life coverage with a savings element
• If the policyholder outlives the policy term, they receive the sum assured along with any bonuses
• In case of the policyholder's death, beneficiaries receive the sum assured
• Generally yield lower returns compared to other investment options
• Provide both death and maturity benefits

Money Back Insurance Plans

• Offer periodic pay-outs of the sum assured at regular intervals
• If the policyholder survives the policy term, they receive the remaining sum assured plus any bonuses
• In case of the policyholder's death during the term, beneficiaries receive the full sum assured
• Provide liquidity during the policy term
• Offer both death and maturity benefits

Whole Life Insurance Plans

• Provide lifelong coverage, typically up to 99 years
• Guarantee a death benefit to beneficiaries, regardless of when the policyholder passes away
• May include a cash value component that can be borrowed against or withdrawn during the policyholder's lifetime
• Generally more expensive than term insurance
• Offer both death and cash value benefits

Group Life Insurance

• Covers a group of people under one master policy, usually provided by an employer
• Coverage continues as long as the individual remains part of the group
• In case a member dies while part of the group, their beneficiaries receive a payout
• Typically more affordable than individual life insurance
• Does not offer any cash value or maturity benefits

Comparison Between Different Types of Life Insurance Policies Dubai , UAE

The table below will highlight & compare main aspects related to the different types of life insurance policies in UAE:

Parameter	Term Life Insurance Policies	Whole Life Insurance Policies	Endowment Plans	Money Back Policies
Overview	Pure risk protection plans.	Protection plus saving plans that offers lifelong coverage.	Insurance plus savings plan- may or may not be participatory	Protection plus savings plans, providing guaranteed money back throughout the policy tenure.
Term	Usually ranges from 5-40 years	Covers the whole life of an insured.	Usually ranges from 10-40 years	Usually ranges from 20-25 years
Death Benefits	Payable	Payable	Payable	Payable
Maturity Benefits	Not Payable	Payable	Payable	Payable
Premium Costs	Affordable Premiums	Usually have higher premiums	High premiums	Affordable Premiums

Features & Benefits of Life Insurance Dubai, UAE

Life insurance provides an essential financial safety net during unexpected circumstances. The comprehensive range of features accompanying these policies further strengthens your life security. 

Listed below are some prominent features of life insurance plans in Dubai - 

Death Benefits -

Upon the policyholder's demise, the insurance company disburses a death benefit (as outlined in the contract) to the beneficiaries. This substantial payment enables the dependent family members to maintain their lifestyle without financial stress. 

If your insurance plan includes bonuses linked to your cash value, these will be paid to your beneficiaries along with the death benefits.

Investment Elements -

Whole life insurance policies bring dual long-term benefits — life coverage and an investment component. A portion of your premium gets channelled into equity or debt funds, as per your preference, promising potentially high returns at maturity. 

Depending on your financial goals, planning, and risk tolerance, your insurance provider can advise you on the most suitable policy type. Some plans also offer the flexibility to switch between different investments to align with your changing objectives.

Maturity Benefits -

Maturity benefits have the potential to amplify the amount that one receives at the end of their policy tenure. So if the policyholder survives the policy period without making any claim, all the premiums paid during that period are refunded upon maturity. In this manner, life insurance also serves as a savings tool while providing life coverage. 

Coverage Against Financial Obligations -

At times, loans, mortgages, or other debts may have been necessary to achieve your dreams. While you're certainly capable of managing these liabilities with your regular income, the financial burden might become overwhelming for your family in the event of your sudden demise. 

The sum assured from your life insurance policy can assist your dependents in settling these debts without any financial strain even amidst such unfortunate circumstances.

Add-On Riders -

Riders refer to additional coverage options that you can attach to your base policy to tailor and boost your life insurance protection. Bear in mind that adding riders to your insurance policy will likely increase your premium. Thus, you should select the coverage that best fits your requirements and choose a life plan within your budget.

Best Life Insurance Plans Dubai, UAE

 

Let’s move on to the specifics and explore some of the best life insurance plans in Dubai –

 

Hayah Insurance – Term Life Protect

Watania Takaful – Pure Protection

Zurich Insurance – International Term Assurance

Orient Insurance – International Term Plan

Sukoon Insurance - DigiTerm

The table below highlights the key features of the best life insurance plans available in Dubai – 

What is a Group Life Insurance in Dubai?

As a part of employee benefits, several companies and businesses provide life and health insurance in UAE. However, providing a separate plan for each employee can be very hectic and cumbersome. For this reason, the insurance providers come up with group life insurance in UAE. Group life insurance is a discrete life protection plan that secures a group of individuals belonging to the same company or enterprise. The company you are employed with owns your policy but you can claim the benefits as long as you are employed with the firm. 

In most cases, the group life insurance contract offers identical benefits to all the employees and, the premiums are far less in comparison to individual life plans. 

The employer holds the actual insurance policy also known as the master contract and the employees are issued life insurance certificates as proof of their contract. Similar to other insurance plans, you can choose your beneficiaries in the group life insurance plan. 

One of the most common groups life insurance is term insurance. Also known as group term insurance, it is provided to employees on an annually renewable basis. A part or whole of the premium in group life insurance is paid by the employer. The insurance benefits are generally one or two times your annual salary depending on your company terms and conditions. Some employers also offer convertible group insurance that can be modified into individual life insurance when you choose to leave the company. However, such conversions cost a lot and, it is not an advisable option. 

Difference Between Group Life Insurance and Individual Life Insurance

The following table depicts the major differences between group life insurance and individual life insurance.

Life Insurance Premium Calculator

Life insurance calculator makes use of four different values to calculate the premium of the life insurance policy i.e. the coverage, age of the applicant, term of the plan, smoking status. 

What Are the Factors That Affect a Life Insurance Premium?

Life insurance premiums are primarily calculated as per the following factors - 

Age:

Younger individuals generally get life insurance at lower premiums, as they are statistically less likely to suffer from severe health issues. Conversely, older individuals are considered high-risk in this regard, which results in higher premiums.

Gender:

Various insurance providers offer lower premiums to women due to statistical data indicating that they generally live longer than men. As a result, they are likely to pay premiums over longer policy tenure, which, combined with lower mortality risk, reduces their premium costs.

Health Status:

Medical examinations conducted prior to purchasing a life insurance policy can influence premium amounts. These tests help insurance providers evaluate your current health and predict potential future health issues, subsequently affecting your premium rates.

Lifestyle Habits:

Consumption of harmful substances such as tobacco or alcohol can lead to higher premiums. This is because these habits increase the risk of health complications, which places individuals in a higher risk category from their insurance provider’s perspective.

Medical History:

A history of serious illnesses such as heart disease or cancer can significantly increase life insurance premiums, as they denote a higher risk profile.

Profession:

Occupations considered hazardous or high-risk, such as mining or oil and gas industry jobs, can also increase your premiums due to the greater risk of accidents or health issues associated with these fields.

Policy Term:

Longer policy terms typically result in larger death benefits due to longer premium payment periods, whereas shorter-term policies can be more expensive in the short run due to the concentrated premium payment timeframe.

Lifestyle Choices:

Engaging in high-risk activities such as extreme sports or dangerous hobbies can also increase your premiums. These activities present a higher risk of injury or death, which leads to higher premium rates.

Body Mass Index (BMI):

Obesity can also influence life insurance premiums. Being overweight or obese is linked to an increased risk of various health complications, including osteoarthritis, cancer, stroke, high blood pressure, and heart disease. This leads to higher premiums for individuals compared to individuals with a healthier BMI.

Who Needs Life Insurance Dubai, UAE? 

It is the sole responsibility of every breadwinner to look after their dependent family members even in the most adverse situations. However, the survival of the dependents can become challenging if something happens to earning member. In such situations, life insurance benefits assist the family members financially to meet their expenses. Therefore, life insurance is crucial to every earning member of the family, including individuals with dependent members such as children, spouses, elderly parents. Additionally, if you have an active loan that your dependents might inherit, you need a life insurance plan. With a life plan, you can secure your loved ones even when you are not around. 

How to Find the Best Life Insurance in UAE, Dubai?

To get the best life insurance plans, you need to research extensively about the available plans. However, when you have outlined your protection requirements it becomes easy to compare and select a suitable plan. You can consider the following factors to compare a life insurance plan in UAE. 

1. Cost of Life Insurance Plan: Before purchasing a life insurance plan, you need to compare and find the insurance company that provides desired protection at the lowest price or under your budget. 
2. Solvency Ratio: The solvency ratio informs about your insurer’s capability to settle the claims during unforeseen circumstances. During natural disasters, an insurance company receives a large number of claims and, in such cases solvency ratio becomes crucial. The insurer that you choose needs to have enough capital to handle and settle a large number of claims simultaneously. Your family’s security depends on the financial security of your insurance provider, therefore consider this factor while choosing your life insurance plan.
3. Claim Settlement Ratio: It is the ratio between the claims made and the claims settled with a year. With a company having a higher claim settlement ratio, you get the assurance that your dependent family members will receive the insurance benefits with ease after you are gone. In addition, you also need to ensure that a significant number of claims are filed, only then you can get a clearer picture. While selecting the best life insurance plan, take the claim settlement ratio into account, as it outlines the reliability of your plan.  
4. Critical Illness Cover: Several insurance companies provide critical illness cover along with a basic life plan. Since a critical illness treatment can cripple your family savings, you need to ensure that an insurance provider covers the hospitalisation and medical expenses of illnesses such as heart and lungs disease, cancer, diabetes, etc. 
5. Additional Covers: With additional covers, you can customise your life insurance plan as per your protection requirements. You don’t need to buy a comprehensive plan and pay for unnecessary benefits if you have the freedom to choose your protection. You can buy additional covers that are relevant to you with your basic plan with a nominal premium rise.

Eligibility Criteria to Buy a Life Insurance in UAE

The criteria required for purchasing a life insurance policy can vary among insurance companies. Still, there are common guidelines that are generally applicable as mentioned below - 

• The potential policyholder should fall within the age bracket of 18 to 75 years to be eligible for a life insurance policy.
• It's necessary for the applicant to demonstrate a stable and reliable stream of income.
• The individual applying for the plan should be a resident of the UAE and possess all the requisite documentation.

Documents Required to Apply for Life Insurance UAE

When applying for a life insurance policy, individuals are required to furnish the following set of documents - 

• Recent passport-size photos
• Emirates ID card
• Passport with an attached UAE residence visa (for expatriates)
• Proof of residential address

Please keep in mind that these requirements can differ among insurance providers. It is advisable to verify the necessary documentation online prior to initiating the application process.

Step by Step Guide to Buy a Life Insurance Policy Dubai, UAE

To simplify your journey of purchasing a life insurance policy, just follow these steps - 

Select the Most Suitable Policy:

With numerous options available out there, making the correct choice of plan can certainly be overwhelming. However, doing a bit of online research can assist you in finding a plan that fits your budget and meets your requirements.

Determine the Coverage:

To ensure a secure future for your loved ones, finding a policy with broad coverage can be incredibly advantageous.

Assess Your Financial Situation:

Evaluating your budget not only facilitates future savings but also eases your financial strain by helping you choose the most affordable policy.

Gather Insurance Quotes:

To simplify the selection process for your life insurance policy, it can be helpful to access several life insurance quotes — whether online or through traditional channels.

Compare Quotes and Finalise the Policy:

After collecting all the quotes, make comparisons based on premiums, duration, and other factors. After a thorough examination, you can finalise your preferred policy.

Life Insurance Payout Options in Dubai, UAE

Insurance companies provide various payout options to help beneficiaries manage the assured sum effectively - 

Steady Regular Payments:

In this scenario, the beneficiaries receive a certain portion of the assured sum periodically (either monthly or annually) for a specified duration as determined by the policyholder. This continues until the settlement or until the insurance amount is fully depleted.

One-Time Lump Sum Payment:

With this payout option, the beneficiaries receive all death benefits, including any bonuses, in one lump sum. This option can be particularly beneficial in situations where large payments, such as loan or mortgage repayments, are required.

Combination of Lump Sum and Regular Payments:

This provides the flexibility of both previous options. In this scenario, the beneficiary receives the death benefit and any bonuses as an upfront lump sum, along with subsequent regular payments (monthly or yearly) for a predetermined duration following the insurance claim. 

This offers the immediate financial support of the lump sum while also ensuring a steady income over time.

What are the Additional Riders Available with a Life Insurance Plan?

Life insurance policies often provide the opportunity to add additional coverage called riders to the base policy. Some of the common riders with respect to life insurance in the UAE include - 

Premium Waiver on Critical Illness:

This add-on cover waives future premiums if the insured individual becomes critically ill. This can be a lifeline for those diagnosed with severe diseases, alleviating financial burdens for them and their families.

Terminal Illness Benefit:

This rider allows for an early claim if the insured person is diagnosed with a terminal illness and has a life expectancy of less than 12 months. This option can be invaluable for individuals who are terminally ill.

Accidental Death Benefit:

This rider offers additional coverage if the policyholder's death is due to an accident. Insurance companies provide a stipulated duration after the accident within which the claim can be made. 

On the policyholder's death, the nominee will receive the accidental death benefit sum assured in addition to the basic death benefit sum assured outlined in the policy.

Premium Waiver on Accidental Disability:

If the policyholder suffers from an accidental injury resulting in a disability, this rider waives off future premium payments. Keep in mind that this add-on cover is available for an extra premium.

Accidental Disability Coverage:

This rider offers benefits if the insured individual becomes disabled or injured, and their condition prevents them from working. It may also cover individuals who suffer from illnesses, injuries, or other unforeseen circumstances, even if they are not technically categorised as disabled.

Critical Illness Coverage:

This popular rider provides a sum if the policyholder is diagnosed with a critical illness such as cancer, heart disease, organ failure, or tumors. It's crucial to review the insurance company's list of covered critical illnesses before opting for this rider.

Accidental Total and Permanent Disability:

This rider offers a separate sum assured to the policyholder in case of total and permanent disability resulting from an accident, distinct from the base death benefit sum assured.

Claim Settlement Ratio Of Life Insurance Plan in Dubai & UAE

The claim settlement process is a vital aspect of a life insurance policy. It's the mechanism through which beneficiaries receive the policy payout following the death of the policyholder. Understanding this process can ensure a smoother transition and timely payout.

Here are the steps typically involved in the life insurance claim settlement process - 

Initial Notification:

The first step here is to notify the insurance provider about the demise of the policyholder as soon as possible. The information required at this stage usually includes the name of the insured, policy number, date of birth, place, and cause of death.

Document Submission:

Next, all the necessary documents need to be submitted to the insurance provider. The list of the documents required usually includes original policy documents, death certificate, and any other required documents as per the terms of the insurance agreement.

Verification and Claim Processing:

Once the documents are submitted, the insurance company will review and verify the documents. After successful verification, the claim will be processed, marking the final step in the claim settlement process. This step ensures that the payout goes to the rightful beneficiary as per the policy's terms and conditions.

Life Insurance Claim Settlement Process

Here is the rundown of the various claim process in a life insurance policy.

For Death Claims

• A Duly Filled Claim Form - To file a claim, beneficiaries need to submit a duly filled claim settlement form. You need to visit the official website of the insurance provider to download the claim form. 
• Submission of Supporting Documents - During the claim filing, nominees need to produce the supporting documents along with the claim form. It must include the following
  • Death certificate, 
  • Documents mentioning the cause of death, 
  • Medical reports
  • In case of death in a foreign country, a valid death certificate issued from the UAE embassy needs to be submitted. 
• Verification and Waiting Period - Once all your documents have been submitted, the insurer performs a verification before settling the claim. It is a standard process and can take a while. However, if you have submitted all the supporting documents, you get a hassle-free claim settlement. The time that the insurer takes to complete the settlement process is known as a waiting period. With all your process done, you may expect a waiting period of 4-5 business days. 
• Settlement Process - After the insurance company verifies all your information based on the submitted documents and finds them satisfactory. The insurance benefits are disbursed to the beneficiaries. 

For Maturity & Survival Claims

On outliving the policy tenure, the policyholder can file a survival claim and receive the maturity bonuses. In most cases, the insurer directly pays the bonuses or the survival benefits if the policyholder registers his/her bank details while purchasing the policy. 

However, you can provide your details any time during the insurance tenure or claim settlement. Following are the list of documents required during survival claims. 

• The original policy document, 
• Emirates ID proof, or a valid passport
• Bank account details

The process for additional rider claims are also similar however, you need to submit additional documents supporting your claim settlement. 

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