What is Life Insurance
Life insurance refers to the agreement between an insurance company and the policyholder wherein the company promises to pay the assured sum to the nominated beneficiaries in case the policyholder passes away before the end of the policy tenure.
To activate a life insurance in UAE, you will be required to pay the premium either as a lump sum or in instalments at regular intervals. The sum assured from the insurance company provides financial stability to the family and may also act as a source of income that can help in fulfilling the essential needs of the family.
You may skim through the following sections to have a better understanding of life insurance dubai policy. Let’s take a look at:
Types of Life Insurance Policies in UAE
The following are the major life insurance dubai plans available in UAE –
- Term Life Insurance –Term life insurance in UAE offers affordable protection for your family by ensuring financial security for the subscribed term. Here, the death benefit is only paid if the insured individual passes away during the policy term.
- endowment plan –Under this plan, the insured is paid a lump sum amount if they live past the policy maturity date. Other than that, this is a traditional life insurance Dubai plan where if the insured passes away before the policy maturity, the family receives the assured sum.
- Whole Life Insurance Plan –Also known as straight life insurance plans or ordinary life insurance plans, the whole life insurance plan offers the policyholder the freedom to secure a loan against the policy or seek cash withdrawal at any time.
- Unit Linked Insurance Plan (ULIP) –This life insurance in UAE serves the dual purpose of financial protection and investment. The premium you pay is bifurcated, where the first part works as a life cover for the policyholder and the other one is invested into funds like equity, mutual funds, or even a mix of both.
- Money Back Plan –This type of plan ensures a lump sum payment to the beneficiary at regular intervals in case the insured individual passes away during the validity period of the plan. There are survival benefits associated with this plan, as you are regularly paid a specific amount and can get a lump sum amount upon the maturity of the insurance policy.
- Pension Plan –These are customised insurance plans that allow policyholders to plan their retirement. It is a savings plan where the premium you pay currently becomes a source of income post your retirement.
Benefits of Life Insurance Dubai
The following are the benefits of purchasing life insurance in UAE –
- Financial security for the family –In case of the sudden death of the insured, the insurer will pay the beneficiary the sum assured. As this amount is often paid regularly in instalments, it can serve as a source of income for the family.
- Meeting financial goals –With a life insurance Uae policy, you can easily achieve your long-term and short-term financial goals. These goals could be children’s education, marriage, or creating funds for retirement.
- Creating a corpus fund –A life insurance policy enables you to create a corpus fund without facing any major market risks. With the policy, you also receive a guarantee of receiving the assured sum the day the policy begins.
- Roadmap to financial planning –A life insurance policy allows users to meet their financial requirements while also planning for their families in their absence.
- Secure a loan –You can secure a bank loan against your existing life insurance policy, with the policy enabling the bank to approve your loan application on the collection of the corpus.
- Works as savings –While several life insurance plans offer bonuses, others provide a sum assured upon maturity of the insurance tenure. Whichever of the two categories you opt for, you can end up making considerable savings.
- Covers medical expenses –Some life insurance dubai plans also come with the option of including the health add-on. On adding this rider, you can receive comprehensive coverage upon hospitalisation and coverage for the treatment of any critical illness as well.
Difference between the Term and Permanent Life Insurance
The following are the key differences between term insurance and permanent life insurance plans.
The tenure could range between 5 years and 100 years
The term is generally between 10 years and 35 years
Paid to the beneficiary upon the death of the insured at any point in their lifetime
The death benefit is payable only if the insured passes away during the policy period
Cover for premature death as well as survival till the maturity of the policy
Only premature death is covered
The maturity benefit is paid if the policyholder lives beyond the maturity period
No maturity benefit is present in term insurance
Higher premium as the insured is covered for more risks for a longer duration
Lower premium rates as the tenure for the insurance policy is fixed
Surrender value/ paid-up
If you stop paying the premium after a certain point, you will still be eligible for the paid-up value on the insurance policy
There are no surrender values and attained paid-up values with term insurance plans
How Does a Life Insurance UAE Policy Work?
Before purchasing a life insurance policy, it is crucial to understand how life insurance works. Some of the most relevant aspects of the life insurance policy are –
- Policy Benefits – To avail of the benefits of your insurance plan, you should pay the premium punctually by the time decided by the insurer and you. Regular payment of the premium ensures that your family or the beneficiary gets a pre-decided lump sum amount. You can make payments either upfront or in instalments. For some policies, the insurance provider also pays bonuses as per the amount accumulated throughout the policy period.
- Claim Settlement –After the death of the insured individual, the beneficiary or a nominee will be required to connect with the insurance provider to initiate the claim settlement process. For this, they would need to submit a copy of the death certificate along with other important documents as evidence and requirements.
It should be noted that the review process generally takes a week or a fortnight. With the company taking additional time to form a decision regarding the claim after that, the whole process ends up taking about 1 to 2 months.
Reasons for a Delay in the Claim Settlement –
- The following are some reasons why your life insurance claim could be delayed or rejected:
- Lengthy investigation into the possibilities of fraudulent practices
- Death from suicide within a year of purchasing the life insurance Dubai policy
- Death due to a medical or health condition not mentioned in the policy
Loan Against Policy on Hospitalisation or Critical Illness –
- You will find some insurance providers that offer the alternative of withdrawing cash against the policy for medical emergencies and hospitalisation. For this, you would be required to submit all the important documents with a letter mentioning the reason for the loan.
Comparison of Different Life Insurance Policies in UAE
Tabled below are the major difference between the several types of life insurance policies in UAE: –
|WHOLE LIFE INSURANCE
|MONEY BACK PLANS
|UNIT LINKED INSURANCE PLANS
|This is a risk protection plan
|It is a combination of insurance and savings plan for lifelong coverage
|It is both an insurance policy and a savings plan with a fixed term
|This is a mix of insurance and a savings plan that ensures money-back during the policy tenure
|An investment and a life insurance plan that is participatory like the endowment plan. Here, the policyholder can earn profits via bonuses or dividends from the insurance company.
|This is a traditional life insurance plan
|Ranging between 5 and 35 years
|A lifelong policy (or till the age of 99 or 100 years)
|Varying between 10 years and 40 years
|Term between 20 years and 25 years
|Ranging from 10 years to 30 years
|Till the time the policyholder is alive
|No benefits paid if the policyholder lives up to the policy maturity
|Maturity benefits paid to the policyholder
|The policyholder is eligible to obtain a lump sum amount upon their survival through the policy tenure
|The amount paid is higher (bonuses collected throughout the policy period) than the survival benefit
|If the policyholder lives beyond the maturity term, they are paid maturity benefits
|The maturity benefit is payable if the insured lives beyond the maturity period
|If the insured person passes away during the policy tenure, the death benefit will be paid to the beneficiaries
|The death benefit is payable upon the demise of the policyholder
|Payable upon the demise of the policyholder
|Payable upon the demise of the policyholder
|Payable upon the demise of the policyholder
|The death benefit can be availed of upon the demise of the policyholder
Exclusions in a Life Insurance Dubai Policy
Most life insurance policies don’t cover deaths occurring due to the following situations –
- Potentially risky activities –The borrower won’t be covered if they pass away while participating in any of the following risk-associated recreational activities such as –
- Scuba diving
- Base jumping
- Rock climbing and mountaineering
- Hang gliding
- Auto racing
The category also includes individuals serving in the positions of a pilot, offshore oil rig worker, underground miner, logger, and more.
- Murder –If a beneficiary as named by the insured is involved in their murder, they will not receive the death benefits. In such instances, the death benefits are paid to the contingent beneficiaries.
- Suicide –Most life insurance policies don’t cover suicide within the first two years of the policy period. Another aspect excluded from the plans is intentional drug overdose during the first two years of the policy tenure.
- Not disclosing relevant information – If the insured person fails to disclose information related to their family medical history or health conditions, the death benefit will not be provided to the beneficiary.
- Other exclusions –Death due to participation in a crime, childbirth, war, and lifestyle choices are not covered in the life insurance Dubai Plan.
Inclusions in a Life Insurance Policy
If the insured individual passes away due to any of the following causes, their beneficiaries will receive the death benefits from their life insurance policy –
- Natural Causes –Heart attack, kidney failure, cancer, an infection, stroke, old age, and other natural causes
- Accidents –Road accidents, poisoning, drug overdose, drowning, or other accidents
- Murder and Suicide
- Pandemic illness– COVID-19
Popular Life Insurance Riders in UAE
Riders in a life insurance Dubai policy simply refer to additional advantages that you can add to your policy to increase its scope of coverage. Some common riders for life insurance in Dubai are discussed below –
- Critical Illness Cover –A critical illness cover will include financial protection for diseases like cancer, heart, and lung disorders. So if the policyholder is diagnosed with a critical illness, the provider will pay for their treatment, medication, and hospitalisation. In case the individual passes away during the procedure, the insurance provider will pay the sum assured to their beneficiaries.
- Terminal Illness Cover –Under this rider, the beneficiaries will receive a portion of the sum assured if the policyholder is diagnosed with a terminal illness. This can help the family members of the insured individual cope with the conditions and pay for the emergency medical expenses.
- Accidental Death Cover –The insurance company will offer an additional amount along with the regular death benefits if the policyholder passes away in an accident. The benefit to be paid is computed as per the base plan and may have a more payable limit.
- Premium Waiver –If the insured individual becomes permanently disabled due to an accident or illness, there are chances that they will lose their job. In such situations, the premium waiver rider repeals the subsequent premiums while keeping the policy active till the maturity period.
- Permanent Disability Rider –The insurance provider reimburses you for your income loss due to termination of employment up to a certain time. It should be noted that this amount is paid as a portion of the assured sum.
How is Your Life Insurance Premium Calculated?
To determine the premium to be paid for your life insurance policy, you can use a life insurance premium calculator, with this online tool helping you compute the premium to be paid without any effort.
In the calculator, you would be required to provide basic details like your age, total assets, ideal retirement age, income, and more. Once you provide the details, the online tool will compute the premium and display it on your screen.
Factors Affecting the Life Insurance Premium Cost
Given below are the factors that could affect the insurance premium calculations –
- Age –If you apply for the life insurance policy at a younger age, you can expect comparatively lower premiums
- Lifestyle –The premium calculation is based on lifestyle choices, with smoking, consumption of drugs and alcohol, and others increasing the applicable premium
- Policy Tenure –If you opt for a life insurance policy with a longer term, its premium would be higher compared to short-term insurance plans as such a plan would cover greater risks than a term insurance policy
- Existing Health Conditions –It is necessary to submit medical reports to verify whether you have any major illness. If you have any severe existing health conditions, the premium would be comparatively higher than that for healthy individuals
- Profession –Usually, occupations related to mining, fisheries, and oil and gas are regarded as highly risky. The premium to be paid for individuals involved in such occupations is high.
Life Insurance Dubai Claim Process
Depending on the life insurance policy type, the beneficiary can file for either death claims or maturity/survival claims in the following ways
- Submission of necessary documents –
- Death certificate
- Documents providing the cause of death
- Medical reports
- Filled out claim form
- Valid death certificate from the UAE embassy if the policyholder passed away in a foreign country
- Verification is done by the insurance provider before settling the claim. Once the investigation is completed, you may need to wait for at least 4 to 5 days.
- Settlement process – Once the documents submitted are found to be satisfactory, the claim will be provided to the beneficiaries.
Maturity and Survival Claims
If you live past the policy maturity period, you can file for a survival claim and avail of the maturity benefits. Generally, the insurance company would directly pay you the bonus or survival claim if you provided your bank details at the time of purchasing the policy.
However, if you need to claim the additional riders, you may be required need to submit additional documents as requested by the insurance company.
Eligibility to Apply for Life Insurance UAE Policy
The following criteria have to be fulfilled to purchase life insurance in UAE –
- Age –You should be at least 18 years old to purchase this type of insurance
- Nationality –You should either be a UAE national or a resident with an official UAE resident visa
- A steady source of income is mandatory
Documents Required to File for Life Insurance UAE Claim Process
Listed below are some documents that must be provided to file an insurance claim –
- A filled out claim form
- Statement of the physician who attended the deceased policyholder
- Death certificate
- Medical report from the last physician who attended to the deceased
- Medical history reports about the illness that led to the death
- Copy of the deceased’s passport
- A police report (in case of due to an accident or unnatural causes)
- Beneficiary’s copy of Passport or national ID
- Documents proving the relationship between the beneficiary and the deceased individuals
How much Life Insurance Cover Do You Require?
To make a decision regarding the life insurance cover, you can keep the following tips in mind –
- Regard life insurance as a part of your financial planning
- Integrate the estimation of the expansion of your income and expenses - this will ensure that your family is able to maintain their current lifestyle in case of an unfortunate event
- Depending on your requirements, you must consider whether to purchase multiple subsequent short-term policies or settle for long-term life insurance in the UAE
It is essential to note that your income and age will play a major role when deciding the amount that you would need as life insurance cover. Other than that, you can consider the following aspects when deciding about the amount you would need as a life insurance cover –
- Number of dependent family members
- Your retirement age
- Employment of your spouse (if applicable)
- Unfulfilled loans (if any)
- Child’s education cost
- Retirement goals
Step-By-Step Process to Purchase Best Life Insurance Plans in UAE
Policybazaar Insurance is your one-stop destination to explore and compare the best life insurance Dubai policies from the top insurance providers in the UAE. In just one place, you can compare and purchase the most beneficial plan at affordable prices in the most convenient manner.
Follow the steps mentioned below to purchase a life insurance plan from our website:
- Determine your financial needs and choose the insurance type you want (term, whole life, endowment, money back, pension, and others) after analysing your budget
- Visit the homepage of policybazaarinsurance.ae
- Click on the life insurance tab
- Provide your personal and financial details in the form present on the page
- You will be then directed to the life insurance quotes page
- Compare the plans and select one that best suits your requirements at efficient costs
- Provide further details and submit your application to conclude the process
Note: During the purchase, you may be required to undergo medical tests. You should also disclose your pre-existing medical conditions (if any) to avoid any hassle at the time of claim.