Term life insurance in UAE: Why you need it more than ever

  DUBAI - Covid-19 has reminded people across the globe about one of life’s paradoxes: anything unexpected can happen to anyone, anytime and anywhere. Perhaps even more concerning is that over half, or approximately 61 percent of expat employees in the UAE do not have long-term savings or financial protection at all, according to the 2020 UAE Security and Savings survey by global consultancy, Mercer. While insurance is a key mechanism by which humans prepare for risk so, by including Term life insurance as part of a holistic financial plan, individuals, especially in the UAE, can bridge the protection gap. Term life insurance can leave their families protected should the unexpected happen in the future. Most UAE residents perceive that Term life insurance coverage is unaffordable. They believe their costs are two to four times more than it actually does. Addressing the perceived cost obstacle amongst the clients and prospects the fact is, the price of a Term Insurance coverage costs less than a meal in the UAE, therefore, making it available for the masses. For example, a male who is a non-smoker can get a Term life insurance coverage of Dh1 million by paying a premium of Dh50 per month. It goes up to Dh70 per month if he is 35 years old and Dh100 per month if he is 40 years old. After the cost, the other obstacle individuals face to bridge the protection gap is their mindset. Individuals in the UAE feel they will squeeze their budget if they buy Term life coverage. The truth, however, is if they wouldn’t position Term life insurance on the higher spectrum of spending needs, their families will have to face the financial set back. The payout amount from a comprehensive Term life insurance helps a family in case the policy holder passes away within the policy term or happens to meet any accidental disability or critical illness (when there are riders attached to the term insurance policy). Term Life insurance helps a family against all these uncertain situations. Followed by the budget constraint, the other protection gap lies with the thought process where individuals feel they already have enough coverage in terms of financial resources or assets. The best way to bridge this protection gap is to roughly calculate your outstanding debts if you have ongoing home loan, car loan, personal loan etc., the impacts of inflation on purchasing power, etc. To make these expenses less burdensome for those you leave behind, it’s a must to have Term life insurance coverage as it is a key cornerstone of a holistic financial plan. According to the Organisation for Economic Cooperation and Development, while UK has the highest life insurance share of 10 percent in their GDP, the UAE has 1 percent of life insurance share in their GDP which is comparatively quite low. The problem no longer lies with the lack of term life insurance products in the UAE market. Rather, it only revolves around insurance buyers' risk awareness and their desire to manage that risk. To make the right choice for buying a protection coverage that has a policy payout which is sufficient enough to replace the policyholder’s income, safeguard against inflation there are many online insurance aggregators in the UAE region. They can help you determine which insurance is best for you in a few clicks. Neeraj Gupta is the CEO of Policybazaar UAE
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