Life Insurance in UAE

What is a Life Insurance Policy?

A life insurance policy is a legal contract between an insurance provider and the policy owner. It guarantees a death benefit to the designated beneficiary in case the life assured passes away. 

To get this financial security, the policyholder must pay the premium in a lump sum or monthly, quarterly or annually. 

Common Terms Related to Life Insurance

Why Should You Buy Life Insurance?

Life insurance in the UAE is a long-term investment and offers financial safety nets and life cover. 

Here are the key life insurance benefits —

• Financial Protection - Life insurance provides financial security to your family. If you pass away during the policy term, your family receives a pre-determined sum — the death benefit — that ensures they are financially stable even in your absence.
• Builds a Saving Habit - To maintain your life insurance policy, you need to pay regular premiums. This requirement helps you develop a consistent saving habit, which benefits you over time.
• Achieve Your Major Financial Goals - Some life insurance policies like ULIPs, have an investment component that builds cash value over time. These plans can help fund major goals such as your child’s education or marriage.
• Wealth Protection & Distribution - Life insurance is a safe long-term investment option. It protects your wealth against taxes and inflation, making it ideal for retirees looking to generate a stable long-term pension.

All The Reasons to Buy Life Insurance

• Family’s Financial Security - One of the many reasons to buy life insurance is to financially secure the life assured’s family in case of the former’s unfortunate death during the policy tenure. The sum assured received helps the family to keep up with the quality of life. 
• Savings for the Rainy Day - Life insurance works as a financial safety net, helping you accumulate savings with time so that you can use the funds in an emergency. 
• Secured Retirement Life - If purchased from a long-term perspective, a life insurance plan proves to be a great retirement tool. The dividends earned or the cover offered acts as a regular income for post-retirement years and maintain the same quality of life. 
• Wealth Generation - Another important reason you should buy life insurance is to generate wealth. Plans like ULIP and endowment plans invest a portion of the premium into market-linked and non-market-linked commodities, respectively, to help the policyholder generate wealth. The remaining portion, meanwhile, goes towards the life cover. 

What are Different Types of Life Insurance Plans?

The different types of life insurance are discussed in detail below —

• Term Life Insurance - This is a basic life insurance cover that offers financial security to the beneficiary or beneficiaries if the life assured unfortunately passes away during the policy term. This plan is more affordable than other kinds of life insurance plans as it offers only life cover and does not have any maturity benefits. 
• Whole Life Insurance Plan - This type of life insurance in UAE financially covers the entire life of the life assured until their death. The policyholder has the flexibility to choose between participating or non-participating whole life insurance plans as per their financial requirements and risk profile. 
• Endowment Plans- This UAE, Dubai life insurance combines savings and insurance instruments in one policy. The aim here is to offer life assured with maturity benefit as a lump sum payout once the policy matures.  This kind of life insurance coverage is suitable for people who want maximum coverage and reasonable savings. 
• Unit Linked Insurance Plan (ULIP) - A ULIP is a life insurance product and a mix of investment and insurance benefits. A part of the premium you pay goes towards life insurance coverage, while the remaining gets invested in various options like equity funds, debt funds, and other securities.
• Retirement Plans - This type of life insurance policy is designed to give you financial stability after you stop working. By investing in a retirement plan, you can build a steady income stream for your retirement years. This involves regularly investing part of your income while you're working. Retirement plans also include death benefits — if the policyholder dies during the policy term, their beneficiaries receive a guaranteed payout.
• Child Insurance - A child insurance plan combines savings and investment to secure a child’s future financially if the policyholder passes away. This plan ensures the child's needs are met, even without the life assured. As a parent, you can invest in these plans to cover expenses for your child's education, marriage, or other future financial goals.
• Savings and Investment Plans - Savings and investment plans under life insurance help you turn your regular savings into long-term investments. These plans provide life insurance coverage and guaranteed maturity benefits. With such policies, you can plan your investments to achieve your life goals more easily. You can also choose a premium protection option, which ensures that your investments continue even if you pass away and protect your financial goals.

What are the Key Features of a Life Insurance Policy?

Here are the primary features of a life insurance policy in UAE —

• Family Protection - Dubai life insurance provides a financial safety net to the life assured’s family if they pass away. The funds help the family cope financially in case of income loss and lead a decent life. 
• Sum Assured - This is an amount that the insurer pays to the beneficiary in case of the life assured’s unfortunate demise. The sum offered can be selected based on the financial commitments and requirements. 
• Policy Term - This is the duration for which the life insurance policy remains active. It can range from a few years to several decades or a lifetime, depending on the chosen policy. 
• Assigning a Nominee - The policyholder assigns a nominee who receives the death benefit in case of the life assured’s demise. They can always change or update the nominee details as and when required.
• Premium Payment - You can be flexible in how you want to pay your premium — monthly, half-yearly, quarterly, or annually. 
• Wealth Creation - Some life insurance plans like ULIPs can help you create wealth over the long term. 

What are the General Exclusions for Life Insurance in UAE?

Listed below are the general exclusion of life insurance policies in UAE —

• Life assured committing suicide within 2 years of the date when the policy was issued
• Residing in a country whose coverage is excluded from the policy
• Residing in a region that is prone to war, strikes, and riots 
• Undisclosed pre-existing medical conditions
• Death due to substance abuse
• Death due to participation in high-risk activities
• Hazardous occupations

How Does Life Insurance Work?

Life insurance, in general, offers beneficiaries a death benefit in case the life assured passes away in case of the life assured’s death during the policy period. 

A life insurance policy has two main parts – the death benefit and the premium. Term life insurance includes both, while permanent or whole life insurance adds a component of cash value.

• Death Benefit - It is the amount paid to beneficiaries when the insured person dies. For instance, if a parent is insured, their children might be the beneficiaries. The insured selects a face amount based on what the beneficiaries might need. The insurance company then decides if the applicant qualifies based on factors like age, health, and activities.
• Premium - Premiums are payments made by the policyholder for coverage. The insurer, in turn, is obligated to pay the death benefit if the insured dies, provided the premiums are paid as agreed. Premium amounts are influenced by the insured’s life expectancy, which depends on age, gender, health, job risks, and hobbies. Premiums also cover the insurer's operating costs and are higher for those with larger death benefits or greater risk.
• Cash Value - Permanent life insurance builds a cash value. The policyholder can use it during their life for things like loans or to pay premiums. However, any loans taken against it will reduce the death benefit. The cash value may not go to beneficiaries — it may stay with the insurer after the life assured’s death.

 

Who Needs a Life Insurance Plan in UAE? 

The ideal time to buy a life insurance policy is when the policyholder is young and just starting their career. Individuals between the ages of 18 and 65 years can buy a life insurance policy. 

Here’s an overview of who needs life insurance in UAE —

• Working Individuals - People with full-time employment can buy affordable life insurance plans. Life insurance offers financial safety to the beneficiary in case the life assured passes away unfortunately during the policy tenure. 
• Married Couples - Even newly married couples can buy a life insurance plan with a joint life cover to secure their spouse’s financial future in case of the other partner’s unfortunate demise. 
• Business Owners - Self-employed individuals who take loans for their business can buy life insurance. This way, in case the life assured passes away during the policy tenure, the death benefit will be directed to repay the debts. This can save their loved ones from being burdened by the loan. 
• Retirees - To ensure their financial freedom, retirees who bought life insurance during their prime years get monthly income from the plan once it matures,
• People with Children - Individuals with children can also buy life insurance. The plan can help the children fulfil their dreams even if the life assured passes away (as a death benefit) or outlives the policy (as a maturity benefit).
• Housewives - Even housewives can buy life insurance using their husband’s income proof and financially secure their loved ones in case of their sudden demise. 

What Factors Affect the Life Insurance Premium?

Discussed below are the major factors that impact your life insurance premium —

• Age - Age is a major factor that affects life insurance premiums. Younger people are generally healthier and pose less risk to insurers so their premiums are lower. As you age, the likelihood of health issues increases, raising your premium rates. For this reason, it’s best to buy a life policy when you are young.
• Gender - Gender also impacts premium rates. On average, women live longer than men, which is reflected in lower premiums. 
• Lifestyle Choices - Your lifestyle affects how much you pay for life insurance. Activities you enjoy, like extreme sports or high-risk hobbies, can increase your premiums because they are seen as risky by insurers.
• Tobacco Use - Using tobacco, such as smoking, leads to higher premiums because it significantly increases health risks. At the time of applying, insurers ask about your tobacco use to assess these risks. Smokers pay more than non-smokers. Note that this can also be the case with those who regularly use alcohol.
• Medical History - Insurers require a medical screening to check for existing or potential health risks. Pre-existing conditions like diabetes or other serious illnesses can lead to higher premiums since they increase the risk for the insurer. 
• Policy Duration - The length of the policy also affects premiums. Longer policies mean higher premiums due to prolonged coverage, while shorter policies typically cost less.
• Occupation - Your job can influence your premium rates. High-risk jobs, like those in mining, fishing, or chemical industries, can lead to higher premiums due to the increased health risks associated with these professions.

How to Calculate Your Life Insurance Premium?

You can easily calculate your premiums using an automated digital tool called a life insurance calculator. 

To get the approximate amount, provide the following details —

• Policy tenure
• Payment frequency
• Sum assured

Things to Keep in Mind When Getting Dubai Life Insurance

Listed below are the things to keep in mind when buying life insurance in the UAE —

• Review Your Insurance Needs - Consult an insurance expert to understand your needs and explore available policies.
• Decide How Much Coverage You Need - Consider how much income you have, whether others depend on you, and how your family will handle debts and expenses after your death. Ensure your coverage is sufficient for your dependents' needs.
• Assess Your Current Life Insurance Policy - If you already have a policy, don’t cancel it until you have a new one. Review your new policy carefully within the minimum period, usually at least 10 days. Consider updating your current policy instead of buying a new one.
• Compare Different Insurance Policies - Know the difference between term life insurance, which has lower premiums but no cash value, and cash value life insurance, which includes whole, universal, and variable life options. Make a choice based on your needs and budget.
• Ensure You Can Afford the Premiums - Check if you can afford the initial and any future premiums. Make sure the costs are manageable over time.
• Evaluate the Policy’s Future - Understand how the cash value of the policy grows over time. Ask your agent for a year-by-year breakdown of benefits and values.
• Keep Your Current Policy - Avoid replacing your policy without thoroughly comparing the new one with your existing one as this could be costly.
• Understand Renewal Policies - Find out if your life or term insurance can be renewed even if your health changes, how much premiums will increase, and whether there's an age limit for renewal.
• Read Your Policy Carefully – Understand the following details — 
  • Do premiums or benefits change yearly? 
  • How do benefits accumulate? 
  • What parts are guaranteed? Your agent can clarify any unclear points.
• Review Your Life Insurance Regularly - Check your policy every few years to adjust for inflation, changes in income, or growing family needs. Consult your agent to ensure your policy still meets your needs.

Where to Get a Life Insurance Plan in UAE?

You can easily buy life insurance in UAE on Policybazaarinsurance.ae. This third-party aggregator has an easy-to-use interface and has top insurance plans from the leading insurance companies in the country. 

When you buy life insurance from Policybazaar Insurance UAE, you get the following benefits —

• Access to accurate quotes
• Round-the-clock customer support at 04 24 72094 or communication@policybazaar.ae
• Easy access to recent market trends
• Key information in one place

How to File a Claim Against Life Insurance in UAE?

Observe the steps mentioned below to file a claim against life insurance in UAE — 

• Inform the Insurance Provider - Immediately Contact your insurer to report the claim using the provided contact details.
• Fill out the Claim Form - Fill out the claim form and provide all the necessary information to avoid delays.
• Submit the Claim - Send the completed form and supporting documents to the insurer through the specified channels.
• Provide Additional Information - If more information is needed, respond promptly to help speed up the process.
• Claim Assessment - The insurer will review your claim based on the provided details and may investigate if required.
• Claim Settlement - Once approved, the insurer will pay the settlement as per the policy terms.
• Seek Assistance if Required - Contact customer service for help if you face any issues during the claim process.

Note – Steps and requirements can vary as per the provider. Always check your policy documents and follow the insurer's instructions.

Make sure to keep the following documents ready during the claim assistance process —

• Original policy document
• Death certificate
• Filled-in claim form
• Medical records (if applicable)
• Emirates ID
• Other supporting documents as per requirements. 

Frequently Asked Questions

 

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