Is Life Insurance an Investment in the UAE?

Is Life Insurance an Investment?

Is life insurance an investment? While it may seem simple, the answer to this popular query is far from straightforward. The answer, depending on your financial goals and types of policies, requires you to dig deeper into several aspects. Some plans, for instance, provide only coverage while others ...read more

Should You Consider Life Insurance As An Investment?

In the conventional sense, life insurance cannot be considered an investment. This is because it only financially secures the beneficiary in case of the life assured’s death. The main objective of a life policy is to replace the income lost due to the demise of the life assured. The lump sum paid out does not generate any additional income or grow over time — unless invested in strategic investment plans in UAE.

However, you can consider some types of life plans as an investment. These plan types include whole life insurance and unit-linked insurance plans (ULIPs). Such policies have a saving component or cash value, which can be considered an investment.

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Why Life Insurance Investment is a Smart Choice?

As we discussed above, in a nutshell, most life plans cannot be exactly considered investment plans. However, they still supplement the investments you make to secure your future.

Think of them as an add-on to your investments. With sufficient life cover, your family won’t have to exhaust their savings or investments in case of your death. Rather, they can fulfil their day-to-day requirements through the sum assured of life plans and continue to let the investments grow.

All in all, getting life cover as an investment at present can help your family avoid dipping into the corpus you have created for the future. With that clear, let’s take a closer look at the reasons why you should invest in life insurance -

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Safety Net for Your Family:

Since your family depends on you, buying life insurance is crucial. If something unfortunate happens to you, the insurance company will pay the beneficiary a sum assured so that they can live a decent life and maintain their living standards. This way, the corpus you made for their future will remain intact for the said purpose — whether it’s higher education abroad for children, retirement planning, etc.

Supplements Your Retirement Goals:

Should you invest in life insurance?’ — if this is what you think, here’s a thing: since it supplements your retirement plans, it's worth considering.

Life policies pay a lump sum that can be used by your family to cover their daily expenses in unfortunate circumstances. This can save them from dipping into your retirement funds.

Dealing with Financial Liabilities:

Financial obligations never end, especially if there are outstanding debts like personal loans, auto loans, and home loans. In your absence, it can be a burden to pay them off. With life coverage, however, your family won’t need to use your investment corpus. Rather, they can use the sum assured to pay off the debts while the investments grow.

Enables the Habit of Saving:

Think of life insurance as an investment that enables a lesson on savings into strategic investment plans. You learn a significant lesson about budgeting.

Estate Planning:

A life policy as an investment can be part of your estate planning strategy. It can offer much-needed liquid assets, preventing your family from selling fixed assets and handling other expenses in unfortunate circumstances.

Element of Investment and Wealth Creation:

Types like Unit-linked insurance plans help you invest in market-linked commodities while also offering an insurance component. These plans are a low-risk approach to create wealth and a retirement corpus while offering life cover.

Peace of Mind Assured:

With life insurance as an investment, you can secure your family’s financial future. This policy works together with your other strategic investment plans in ensuring that your loved ones don’t suffer financially.

Wrapping Up

Life insurance is primarily designed to provide financial security for beneficiaries in the event of the policyholder's death. While it isn't typically viewed as an investment, certain types, like whole life insurance and unit-linked plans, do include a savings component.

Beyond that, even standard life plans can supplement retirement goals, help manage financial liabilities, encourage saving habits, and aid in estate planning. Overall, you get peace of mind in the knowledge that your family's financial future is secure.

Whether an investment or not, you should consider buying life insurance in the UAE!

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Frequently Asked Questions

You can invest in life policies like whole life insurance plans and unit-linked insurance plans as they offer a cash value component.

Yes, you should buy a life policy as it financially protects your family in case something unfortunate happens to you. If you get a policy at a young age, you can lock in low premiums and high coverage.

In the most basic sense, life insurance is a financial protection plan that safeguards your family in case something happens to you. Investment, on the other hand, is designed to grow your wealth with time so that you can achieve long-term goals like a house purchase or funding education.

You should invest early on in life coverage. The ideal age group, as per the experts, is your 20s. However, this doesn’t imply that you cannot buy life insurance later on in life. This is a much-needed financial instrument to secure your family’s future after all.

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