Term Insurance

The unpredictable nature of life makes life insurance cover a must-have. When it comes to life coverage, term insurance is the easiest and the most effective - a low-cost plan that provides comprehensive financial security.

In your absence, your loved ones suffer, not only from grief, but also financial strain caused by the loss of your income. Term plans help take care of your family’s living expenses, as well as future financials goals, in case you are not around to provide them.

As the name suggests, an individual can purchase this plan for a set number of years, also known as the policy term. Other than a death benefit, a term plan also helps cover the unavoidable financial burden on dependents, in case the sole breadwinner of the family suffers from any disability or critical illness.

Term insurance helps policy owners ensure the financial safety of their loved ones, especially in the UAE, where the cost of living is considerably high.

Listed below are some features of term plans.

• Death Benefit: The guaranteed amount the nominee will receive in case of the policyholder's death or disability.
• Terminal Illness Cover: An accelerated payout incase the policyholder is diagnosed with any terminal illness.
• Critical Illness Cover: An accelerated payout incase the policyholder suffers from any critical illness. Namely: heart attack, stroke, cancer, etc.
• Maturity Bonus: A payout (as defined in the policy) you receive at the end of the policy term in case of no claim.
• Worldwide Coverage: Term plans cover you in any part of the world.
• Pre-existing Disease Cover: A payout in case of the policyholder’s death due to any pre-existing medical condition.

• Simple: Term insurance is less complicated than other life insurance plans. The nominee gets financial support on sudden death of the policyholder. Death can be due to any cause – sickness or accident.
• Affordable: Term insurance is the most cost-effective insurance available in the market. You get the most bang for your buck.
• Flexible: The plan can be for as low as one year. Most common terms are 10, 15, 20 and 25 years.
• Targeted: Can be used to cover specific needs - mortgage, loans, children’s education, dependent support.

• Even if you leave the UAE, you can take your term plan with you.
  

  Yes, provided you maintain your contributions, the plan is fully portable and can move around with you. No matter where you are, if something happens to you, your family will receive a payout.

• Term plans cost only a tiny fraction of traditional life insurance plans.
  

  Regular life insurance plans provide a maturity benefit. This makes them expensive as compared to term insurance plans. In order to save on cost, you end up taking lesser coverage. And, a lesser cover is often not enough to provide adequate security for your family, especially taking into account rising costs (inflation).

• I am an expat in the UAE, and I don’t intend to stay here forever. So, I have purchased a term plan in my home country.
  

  Firstly, even though your stay here may be temporary, but your expenses are not. Given the flexibility of term plans, you can even opt for a shorter tenure plan of 10 years to secure your UAE expenses.

  Secondly, the Dirham is a strong currency. If you happen to have a home country term insurance say from India, whose currency is significantly weaker, it is advisable that you offset the currency risk with a Dirham denomination product.

The eligibility requirements for purchasing term policies can differ from one insurer to another. Here is a general age criterion for availing term insurance UAE.

The documents required may also vary from one insurer to another, but here is a list of the commonly asked documents.

• Residence Visa and Passport (for expats)
• Emirates ID

Here is a list of inclusions under term insurance.

• Death Any Cause: The nominee will get a payout on sudden death of the policyholder. Death can be due to any cause – sickness or accident.
• Terminal Illness: An accelerated payout incase the policyholder is diagnosed with any terminal illness.

Term plans offer protection against the risk of death. However, there are some conditions wherein the plan will remain null.

• Involvement of insured in illegal activities
• Death due to childbirth or any other complications related to pregnancy
• Accidental death when driving under the influence of alcohol influence
• HIV/AIDS
• Suicide (not covered for first 12 months)

People in the UAE have the option to choose from different kinds of term policies. Based on the providers, these plans may have different features and benefits.

• Level Term: In a level term plan, the premium does not change for the selected duration of the policy.
• Increasing Term: As opposed to a decreasing term plan, in an increasing term plan, the death benefit increases with time, along with the premium.
• Decreasing Term: In a decreasing term policy, the covered amount keeps decreasing, along with the premium.
• Convertible Term: This plan allows policyholders to convert their term plan into a whole-life plan without undergoing any medical checkup.

• Claim Intimidation: The beneficiary can inform the insurer and get the claim registered by contacting the customer care.
• Claim Assessment: As soon as the claim gets registered, the insurance provider will make an assessment of the claim request and validate the submitted documents.
• Claim Settlement: After proper verification, the insurance company will settle the claim amount via bank transfer or cheque.

One size does not fit all. Similarly, one plan may not be suitable for everyone. There are plans that come with basic coverage, while on the other hand there are plans that offer additional features like critical illness cover. Therefore, in order to find the best one, term insurance comparison is important. This comparison can be done online.