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Life insurance is a crucial part of financial planning for individuals with dependent members. It safeguards the family during the sole earner’s unexpected demise. Not only protection, but with a correct insurance plan, individuals also get the opportunity to grow their wealth over the period. However, people often confuse whether to buy a life insurance plan or not or when is the right time to get themselves secured?
To answer that, life insurance backs you up financially and aids your family in tackling emergencies and maintaining their lifestyle, so including a life plan in your investment is always the right choice.
Life insurance in the UAE is available to any individual who is capable of paying the premium. An insurance plan is essentially a contract between the insurer and the policyholder in which the earlier protects the latter in exchange for an insurance premium. Depending on your security requirements, you can even customise your plan. Whether you are a working professional, a housewife or a business owner, you can choose to buy a life insurance plan suiting your needs.
Life Insurance Plans in the UAE
With over 62 insurance companies, UAE has a competitive insurance market with protection plans that secure almost all of your valuables. When it comes to life insurance plans in the UAE, the companies offer a range of comprehensive and bespoke plans in line with the protection requirements of every individual. There are several life insurance plans based on the individual’s age, income and other factors. A few insurance plans available in UAE are as follows -
Term Life Insurance - A term life insurance offers limited period protection ranging from 10 to 35 years without any maturity benefits. In case the policyholder dies during the active insurance tenure, the company pays the death benefits to his family. Since it involves no survival benefits, the policy is affordable and provides only financial security. Such insurance plans are ideal for individuals with a low salary, young professionals or individuals with no other objective than financial protection.
Whole Life Insurance - As the name suggests, whole life insurance in the UAE offers lifelong security to individuals. The company may fix a premium payment tenure based on the insurance and premium amount. The plan offers cash values against your premium, and you may withdraw them during financial emergencies. Whole life insurance is ideal for individuals seeking protection for their entire life and for those who may have dependents throughout their life expectancy. The whole life plan is costlier compared to a term insurance plan.
Endowment Plans - Endowment plans are insurance policies with saving and investment objectives. The amount that you invest in an endowment plan is divided into units and invested in the market. The plan may be subject to market fluctuations; however, the insurance companies promise minimum guaranteed returns. In case the policyholder dies during the active policy tenure, the provider pays death benefits to the policy beneficiaries. Endowment plans may be further classified into unit-linked investment plans or investment-linked plans, depending on their investment type. The plan is suitable for individuals preferring security with financial growth.
Who Buys a Life Insurance Plan in the UAE and Why?
The life insurance plans in the UAE are not individual specific, and anyone can avail of them anytime. Before buying life insurance, individuals need to consider various factors and their protection needs. The security requirements of young working professionals are different from those reaching retirement. Similarly, a housewife also needs life insurance with a different objective. Here is the rundown of individuals who need to buy life insurance with various insurance objectives.
Young Professionals - Young professionals may not have family responsibilities in the near future. They may opt for life insurance to secure their parents and to cover the cost of their last rituals. Additionally, they can invest in endowment plans to grow their investments over time. For such individuals, there are several options among term insurance, whole life insurance and endowment plans. Buying life insurance in the UAE at a young age would cost you lesser than getting it in your thirties.
Individuals with Dependent Family Members - As a breadwinner, we have some obligations towards our family members. Any accident resulting in the loss of sole earner would leave the dependents devastated and a financial burden to deal with. In such conditions, the insurance benefits help the family to tackle the situation and maintain their lifestyle. Individuals with family obligations can opt for affordable term insurance or whole life insurance. If they wish to secure their life along with investment and savings purposes, an endowment plan can be a suitable option.
Self Employed Individuals and Business Owners -In most cases, salaried individuals receive complimentary life insurance from their employers, also known as group life insurance. However, self-employed individuals need to get life protection with enough coverage to sustain their family’s livelihood after their demise. They can opt for various life insurance plans depending on their financial planning. Similarly, a business owner is an integral part of the enterprise. Apart from the family obligation, the owners also have responsibilities towards the business. An unforeseen loss to them can affect the business gravely, so they need to insure themselves with comprehensive life insurance, which provides enough security for their family as well as business. They can opt for a business owner life insurance in the UAE, which protects the enterprises.
Housewives and Children- Many people don’t prefer to buy a life insurance plan for housewives, considering the additional cost and burden. However, the loss of a spouse can be devastating and have a lasting effect. Additionally, they would also need the expenses to take care of home and child in case of the sudden demise of the spouse. So life insurance for housewives is significant as it can bear the funeral cost, childcare expenses, etc.
Children's insurance is crucial to secure the child’s life, and several children insurance plans also cover their higher education fees. Hence, you can secure your kid’s life and also invest in his/her college education.
When Should You Buy a Life Insurance in UAE?
There is no specific age to opt for life insurance. Whenever you feel the need to protect yourself and your family, you can buy a life insurance plan in the UAE. However, getting a life insurance plan at an early age would cost much lesser than buying it post your thirties. The insurance companies remain lenient towards young applicants and provide them with better coverage because of low claim chances. Additionally, young individuals get several options and add-ons to avail themselves of comprehensive protection at reasonable rates.
Life insurance is available to any individual who can pay the premium. Since the policy protects individuals and their dependents from unforeseen events, it should be included in the financial planning. UAE has an elaborated insurance market with a variety of Islamic and conventional protection plans serving the security needs of every individual. However, before you buy life insurance in the UAE, consider your coverage size and affordability.
Atul has had a flair for writing ever since he started writing essays in school, which inspired him to subsequently opt for a career in writing. He loves to write about places he's been to (the list is endless) and financial products that can help people make a real change in planning their finances better.