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Types of Term Insurance Plans

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If you are searching for an appropriate term insurance plan, then you must have gone through numerous insurance plans with lots of benefits. The list of these term insurance plan benefits is so extensive that even seasoned investors sometimes get confused.

During the last few decades, term insurance companies in the UAE have introduced different types of term insurance plans that can specifically cater to the needs of their customers. In this article, we will discuss the different types of term insurance plans available in the UAE which in turn will also help you understand which type of term insurance is best suited for you. However, first, we need to understand what a term insurance plan is.

About term insurance plans

Term insurance is regarded as one of the most fundamental embodiments of life insurance. To put it in a simpler way, term insurance plans can protect any individual’s family from unanticipated events or circumstances while offering them financial protection and security when their sole bread earner is unable to produce any income (or is not around with them anymore).

Every term insurance plan comes with a specific time period which is regarded as the plan term. During the designated plan term, if the policyholder dies, then his/her nominee will receive all the money assured by the insurance company. The assured sum is an amount agreed upon by the policyholder at the time of purchasing the plan and is only payable in the event of the policyholder’s death.

After the fixed term of the insurance plan has been completed and the policyholder is still alive, then the term insurance plan achieves maturity. And, the policyholder will not receive any benefit since the plan has matured. However, it is primarily applicable in the case of a pure protection term insurance plan (which also provides death coverage).

Check out different kinds of term insurance plans

Term insurance plans in the UAE can be widely classified into six different types focusing on their benefits and coverage. These six types of term insurance plans are discussed below:

Level Term Plans

This type of plan is one of the most basic types of term insurance. In Level Term Plans, the assured sum is fixed for the entire term of the policy and upon the death of the policyholder, the nominee will receive all the benefits from the insurer.

Increasing Term Plans

Increasing Term Plans offer policyholders the to increase the assured money on a yearly basis while the policyholders will have to pay the same premium amount during the entire policy tenure. Naturally, in comparison to the basic Level Term Plans, Increasing Term Plans have more benefits.

Term Plans with Riders

You can get multiple rider options such as critical illness cover, accidental death cover, etc., in this type of plan. When you purchase a normal term plan, you can add multiple riders with them and you will have to pay a small premium amount for the same. For instance, if any policyholder opts for a rider in the form of a premium waiver benefit, then he/she won’t have to pay any future premiums in case of an unexpected event where the policyholder has been severely injured.

Decreasing Term Plans

In Decreasing Term Plans, the assured sum decreases every year in order to satisfy the customer's requirements. Decreasing Term Plans are applicable in situations where policyholders have a single or multiple loans and are currently paying monthly EMIs. With this type of plan, the assured sum reduces with each EMI payment at a chosen frequency. In this case, the total loan amount also gets reduced.

TROP Plans or Return of Premium Plans

TROP Plans or Return of Premium Plans is a different kind of term insurance policy where the insurer will return the paid premiums if the policyholder survives the tenure of the policy.

Convertible Term Plans

Convertible Term Plans, as the name suggests, is a type of plan where the policyholder has the ability to change his/her term plan into any other type in the future. For example, if you have bought a term insurance plan for 15 years but after 5 years you want to change it into a whole life insurance plan, endowment plan, etc., then you can easily convert it.

Some of the best term insurance plans in UAE

Name of the Plan Tenure Yearly Premium Starting From (AED) Life Coverage (AED) Sickness Coverage (AED) Accidental Coverage (AED)
HAYAH Insurance 10 years 488 up to 7.50k 7.50k 7.50k
Takaful Emarat 10 years 215 Up to 3 million 350,000 350,000
National Life Term Plan 10 years 260 Up to 350,000 350,000 350,000
Noor Takaful Pure Protection 10 years 600 Up to 3 million 300,000 300,000
Noor Takaful Pure Protection Cashback 10 years 260 Up to 350,000 350,000 350,000

Things you should consider while purchasing a term plan

When it comes to the subject of finance, most people do not have enough knowledge in this field. If you are a term insurance policyholder and something happens to you, then it is natural for your nominee to receive the assured sum. However, if your nominee does not know how to properly handle the money, then he/she may end up spending it all together in one go.

As a term insurance policyholder, it is your responsibility to educate your nominee so that he/she can manage the fund properly in your absence. Be sure to educate and inform your chosen nominee about the term plan you have invested in and what to do with the assured sum.

The temptation to overspend the money is another important factor you should consider while educating your nominee about the term plan. Many a time when people come across a huge amount of money, they tend to overspend and purchase certain things that may not be affordable for them in the long run. As a result, your nominee may end up finishing the entire claim amount and it may also lead to a monetary struggle.

To conclude

Although no one wants to face any difficulties in life, uncertainty is an integral part of our lives. The surprises we may come across in our lives may sometimes be very bitter. However, in this short lifespan, you can purchase an online term insurance plan that will definitely make the life of your loved ones better.

Nowadays, insurance providers offer many online term plans featuring a range of advantages, such as convenience, quick response time, and lower costs. Notably, they are completely safe. Therefore, you should opt for a term Insurance plan that can secure the future of your family and loved ones, in your absence.

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