One of the most straightforward ways of keeping your family financially secure during the most unfortunate circumstances is to purchase a term insurance plan. A life insurance policy is essential in today’s unpredictable world, with the absence of term life insurance adversely affecting the lives of the beneficiary and other dependents.
Purchasing a term insurance plan, especially short-term plans like a 5-year term life insurance plan, can ensure that your dependents never fall short on finances even in the direst situations. With a short-term insurance plan, appropriate coverage and benefits can be provided to the beneficiaries in case of the demise of the policyholder.
In this article, we will discuss what is a 5-year term life insurance plan, its benefits and features, who can secure the 5-year term life insurance, and more such aspects.
What is a 5-Year Term Life Insurance Plan?
A 5-year term life insurance plan, one of the shortest-term life insurance plans, is a policy that offers insurance coverage for 5 years. It is. Several insurance providers can give you the option to convert your policy into a permanent one once the plan expires. In such situations, the 5-year term life insurance plan works in a straightforward manner where the insured pays the premium regularly.
In case the policyholder passes away during the policy period, the beneficiary receives the sum assured as a death benefit. However, if the policyholder survives the policy period, they will not be given the maturity benefit. There is no payout even if the insured passes away once the policy lapses.
Given below are some reasons to purchase a 5-year term life insurance plan –
- It financially secures the family and allows them to pay off the unavoidable expenses
- The offered payout helps the family fulfil their emergency expenses in the future
- The sum insured provided as a death benefit can help in the repayment of the debt
Features and Benefits of 5-Year Term Life Insurance Plans
Check out the salient features and benefits of 5-year term life insurance plans –
- Death Benefit – Even though a 5-year term life insurance is a short-term investment option, it still provides the death benefit to the nominee in case the policyholder passes away untimely. The death benefit is a sum assured that is paid only if the policyholder passes away during the policy period. The death benefit in a term insurance plan is usually more than that in other insurance plans.
- Low Premium Rate – 5-year term life insurance plan requires the insured individual to pay a lower premium. However, it’s worth noting that the premium rate chiefly depends on the age of the applicant as well as their medical history, riders (if any), family’s medical history, occupation, lifestyle, and so forth.
- Future Financial Planning – A 5-year term life insurance plan enables the insured individual to plan the finances for future requirements. This way, if the insured passes away untimely, the nominee or the dependent can remain financially secure in the future.
- Add-on and Riders – With a 5-year term life insurance, the policyholder can select different riders based on their medical condition and other requirements. Opting for riders like critical illness cover provides financial security to the policyholder to avail of quality treatment for diseases like cancer, diabetes, and more. Some other riders that can be availed at nominal additional costs are the return of premium, premium waiver, accidental death cover, and so forth.
- High Sum Insured – Compared to the premium that you pay over the tenure, a 5-year term life insurance plan provides a higher death benefit amount. In the UAE, the policyholder can get a term insurance plan under AED 200 with a higher coverage of up to AED 5 million.
- Premium Payment Options – When buying a term insurance plan, you have the option to pay your premium monthly, quarterly, half-yearly, or annually. You can even opt to pay your premium in lumpsum for the entire period.
- Premium Waiver – In case the insured individual becomes permanently disabled which results in unemployment, the insurance provider can provide the option of a premium waiver. With this, the policyholder does not need to pay any further premium to get the benefits of the insurance for 5 years.
- Rebates – If you have been living a healthy lifestyle, the insurance provider can offer you rebates and discounts when you purchase the policy.
- Flexible Payout Options – The policyholder can choose to receive the financial benefits of the plan either as a lump sum amount or in instalments. When they choose the lump sum options, the nominee receives the death benefit at once. With an instalment or staggered payout option, the beneficiary receives the benefit amount in regular instalments.
- Peace of Mind – With a term life insurance plan, the insured individual can have peace of mind that in the event of an unforeseen situation, their family will remain financially secure.
Who Can Buy a 5-Year Term Life Insurance?
Individuals belonging to any of the following categories can purchase a 5-year term life insurance plan in the UAE –
- Only Earning Members – This insurance plan is suitable for single-income families. Here, the earning member can purchase the 5-year term insurance plan and secure the family financially for unforeseen scenarios.
- Senior Citizens – The applicant should not be older than 65 years of age to purchase the 5-year term life insurance plan
- Employees working in Life-threatening Occupations – Even though the premium rate would be comparatively higher, individuals working in life-threatening conditions should ideally get 5-year term life insurance to financially secure their families.
Eligibility Criteria for 5-Year Term Life Insurance
To purchase a 5-year term life insurance plan, it is essential to meet the eligibility criteria. Generally, most term life insurance plans have straightforward eligibility standards like –
- Age – To secure a 5-year term life insurance plan, the applicant needs to be at least 18 years old. However, with some providers setting the age limit to 21 years, you must check the policies of the providers before purchasing a plan.
- Nationality – To get a suitable 5-year term life insurance plan, you should be a UAE national or a resident with a valid UAE resident visa. When you are buying a term insurance plan, you may need to present some other documents that serve as proof of your residency.
Documents Required to Purchase a 5-Year Term Life Insurance Plan
Here is the general list of documents that you need to provide while submitting your application for a 5-year term life insurance plan in the UAE –
- Emirates ID
- A duly filled application form
- Passport with valid UAE residence visa (for ex-pats)
- Bank statements from the last 3 to 6 months
- Income Certificate or Salary Slip
- Medical Records
- Address Proof like rental agreement or utility bills
Note – Depending on your insurance provider, you may be asked to submit some additional documents
General Procedure to File a Claim for a 5-Year Term Life Insurance Plan
Unfortunate situations like death can take a toll on the mental, emotional, and financial health of the family. However, with a 5-year term life insurance plan in place, the beneficiary can at least secure themselves by filing a claim settlement in case the insured individual passes away.
Discussed below is the claim settlement procedure that the beneficiary needs to follow –
- Inform the insurance provider – The foremost step towards filing a claim is to elaborate on the details of the event that resulted in the insured’s death to the provider. For instance, if the death was due to an accident, the nominee would be required to provide every detail of the accident.
- Submit the claim form with documents – After informing the provider about the situation, the beneficiary should submit the claim form affixed with the required documents. The main documents required are a death certificate along with other certificates issued by the medical institution.
The following is the list of documents the beneficiary needs to provide in case of the policyholder’s death –
For death within the UAE
- A valid copy of the beneficiary’s passport or Emirates ID
- Insurance certificate
- A copy of the insured individual’s passport with a visa page to evince the residency status
- Original death certificate
- An authentic medical report detailing the diagnosis and the reason for death
- A copy of an autopsy report and the police report filed (if the death is due to an accident)
If the death occurred outside the UAE, the following additional documents would be required
- Authentic copy of the death certificate attested by the UAE embassy of the country where the death occurred
- A copy of the UAE visa cancellation page
- Other documents as and when required by the insurer
- Once the insurance provider receives all the documents and a claim form required, the process of reviewing the paperwork would be initiated. Here, the provider would analyse and assesses the genuineness of the documents and the claim, with the insurer’s designated doctor also reviewing the authenticity of the certificates received. Once the process concludes, a go-ahead is given to the billing department.
- Once the claim file is reviewed and transferred to the billing departments, the total amount to be paid to the nominee is calculated, after which the estimated sum assured is provided.
Things to Consider When Buying a 5-Year Term Life Insurance
Before purchasing a 5-year term life insurance plan in the UAE, you should take some factors into account –
- Premium Amount – The insurance premium is an important factor to consider when purchasing an insurance policy. The majority of leading insurance providers in the UAE offer maximum coverage at lower premium rates. However, based on the type of coverage and the riders you plan to include in your 5-year term life insurance plan, the premium amount may vary. Thus, when comparing and choosing the plan, it is crucial to be aware of the premium you would need to pay.
- Claim Settlement Ratio – Before purchasing a 5-year term life insurance plan, you should opt for a company with a higher claim settlement ratio. A higher claim settlement ratio implies that the provider approves claims easily and pays out the sum insured to the beneficiaries on time. Any company with a claim settlement ratio above 90% is usually considered a good claim settlement ratio.
- Regular Payout Method – You should consider opting for an insurance provider who pays the sum assured regularly rather than paying a lumpsum amount. A regular payout, be it monthly, quarterly, or annually, is more helpful for the beneficiaries in terms of maintaining quality living standards.
- Claim Rejection Ratio – Besides claim settlement ratio, you should also consider the provider’s claim rejection rate before securing a 5-year term life insurance plan with them. Try and find out about the number of claims they have rejected in the last few years. If a provider is providing wider coverage at a lower premium rate but rejects most claims, the entire purpose of securing the term life insurance fails.
Policybazaar UAE – Your One-Stop Destination for Term Insurance
While you can purchase your 5-year term life insurance plan online as well as offline, online shopping on third-party aggregator portals is the best option considering how it helps you compare and choose the best insurance policy. In the UAE, this can be easily done using Policybazaar UAE which is an easy-to-use portal that brings term life insurance policies from the leading providers in the UAE under one roof.
Once you are on Policybazaarinsurance.ae, simply visit the term insurance section. You will be then directed to a webpage with the lead form. Fill in the lead form with personal details and click on the submit button. This will take you to the quotes page where you can browse through the options and read the policy wordings in detail.
Some of the benefits of purchasing a 5-year term life insurance plan via Policybazaar are –
- Affordable premium rates for all the life insurance policies
- 24-by-7 customer care if you are confused in the process of selecting the term insurance policy
- Assistance from an expert team of insurance advisors via phone, WhatsApp, and e-mail
- Incredible after-sales service
- Best plans from the best providers in the UAE in one place
- Rebates and discounts on the premium rates
To know more about the 5-year term life insurance plan, read the FAQ section.
Frequently Asked Questions
Q1. How to get the 5-year term life insurance plan at a minimum premium rate?
Ans: Several factors are considered when you apply for term life insurance such as your age, medical history, lifestyle habits, current health condition, your family’s medical history, and more. Maintaining a healthy lifestyle and purchasing term insurance plans at an early age can help you purchase the plan at a minimum premium rate.
Q2. What scenarios could lead to issues in getting the claim settlement for a 5-year term life insurance plan?
Ans: The two scenarios that could create challenges are –
- Suspicion or misleading information provided on the claim application form
- If the death was unnatural (suicide or plane crash), the insurer would verify the certificate with the local magistrate or see the flight passenger records
Q3. Who can buy the 5-year term life insurance plan in the UAE?
And: 5-year term life insurance plan is suitable for solo earners in the family, senior citizens, and employees working in life-threatening conditions.
Q4. What are the benefits of a 5-year term life insurance plan in the UAE?
Ans: The following are the main benefits of a term life insurance plan –
- It provides financial security to the family in the most unfortunate scenarios
- The payout helps the family to meet the emergency expenses
- The beneficiaries get maximum coverage at lower premium rates
- The sum assured can help the family repay the existing debts
Q5. What documents are required to purchase a term life insurance policy?
Ans: Listed below are the basic documents you need to provide to purchase a 5-year term life insurance policy –
- Passport-size photograph
- Income certificate or salary slip
- Emirates ID
- Passport with UAE residence visa (for ex-pats)
- Address proof
- Medical records
Policybazaar UAE – Helping you navigate the wilderness of the insurance world!