Term Insurance Vs Permanent Insurance

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When picking an insurance policy in the UAE, one of the most important questions to address is which Insurance policy is going to fulfill your requirements - is it permanent insurance or term insurance? Owing to so many options, selecting one plan to cover your needs accurately can be a bit confusing, especially to beginners.

The two most popular types of life insurance are term insurance and permanent insurance. Term insurance, as the name suggests is meant to cover you for a specified period but permanent insurance is to cover you for the rest of your life. Term life insurance, which is most commonly used for transitory, short-term necessities such as mortgages, can be opted for depending on your needs. Alternatively, all permanent life insurance plans provide long-lasting protection as well as monetary value for you.

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Term Life Insurance Plans in UAE:

Term life insurance in the UAE offers the best coverage value on your premium. It protects you for a certain amount of time, such as ten, twenty, thirty, or forty years ensuring temporary financial cushioning for your dependents. The policy lasts between 10  to 40 years. When the term expires, you are required to either renew the insurance or upgrade it to a permanent policy to retain that coverage. Term life insurance generally has a more affordable premium in comparison to permanent life insurance. There are various factors that play into determining the sum assured like your age, health status, and the amount of coverage you need. 

Permanent Life Insurance:

The term "permanent life insurance" refers to plans that don't have an expiry date. Permanent life insurance includes both a death payout and it has a savings component too. 

Permanent life insurance plans are divided into two categories:

  • Whole Life Insurance -  Whole life insurance has set rates for the duration of its policy. When you pay your premiums regularly, the policy's cash value grows accordingly. Policyholders can gain investment returns from policy depending on their insurance provider.
  • Universal life insurance -  It's linked to a money market account that pays interest along with a high flexibility rate. Within certain restrictions, you have the opportunity to change your life insurance payout or premiums and therefore be regarded as a variable life insurance policy. This insurance provides a wide variety of investment options and is a better alternative for individuals that are more prepared and confident towards greater risk. Throughout the duration, your benefits and premiums might drop or rise. You can also borrow money against this insurance, and yet your principal amount will be reduced if you have any existing loans.

Term Insurance vs Permanent Insurance:

Benefits of opting for Term Insurance over Permanent Insurance:   

  • Term insurance is a preferred choice because of its affordability. 
  • Term life insurance plans are  equipped with the flexibility of getting converted into permanent life insurance without having to retake medical examinations. This is particularly beneficial to those who develop certain medical issues making other insurances choices prohibitively expensive. It is also a great choice for people have chronic diseases that need constant care and monitoring.
  • Term life insurance, unlike permanent insurance, does not enable you to accumulate cash over the tenure. If you don't add a restoration of premium rider after the policy ends, you won't be able to receive your money back. You might have to pay a little extra for coverage if you choose this option.
  • Permanent life insurance is a good option if you want a life cover that will not expire and also want the cash value to grow over time. Additionally, you always have an option to switch over to the permanent life Insurance from the term Insurance without the hassles of going through complex paperwork.
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Basic features of Term Insurance in comparison with Permanent Insurance:

Basic Features 

Term Life Insurance 

Permanent Life Insurance

Coverage Span 

1 – 30 Years


Cost of Premium

Lower Premium

Higher Premium

Premium Variation

Can change with time

Generally, Stays the Same

Cash Value

No Cash Value , No Saving Component

The longer you pay for, the higher the cash value 

Convertible Policies


Not Convertible

Death Benefits



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It is important to assess your family’s financial needs before buying term insurance or permanent life insurance. You must assess your requirements as well as those of your family before making this very important choice that can change your family’s future.

If affordability is a concern for you, then term life insurance is an ideal choice as its premiums are quite affordable. Permanent life insurance is the highest form of security that you can ensure for your family. The trick is to choose a service that satisfies your financial needs.

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