Benefits of Life Insurance Policy in UAE
“Life is unpredictable; who knows what will happen tomorrow?”
We’ve often heard this concern from our family, friends, colleagues, motivational videos, and life insurance ads; but experienced it last year. The Covid-19 pandemic led to never-seen-before house arrests & economic hardships, affecting thousands of families – financially and emotionally.
➔ A salaried employee working hard to meet your family’s current needs and wants
➔ A business owner working hard to create/maintain a legacy
➔ An individual giving your best to build a stable life for yourself
Have you thought of an action plan to face life’s unexpected challenges, say a chronic illness, a brutal accident, or even death?
Many people sign up for savings plans or invest in the stock market to build their wealth. While a savings plan is a reasonable action, in isolation, it does not take care of unexpected risks associated with life nor on your ability to generate an income. Moreover, trading accounts motivate people to buy and sell equities constantly, which usually leads to overtrading. This action, coupled with a lack of financial knowledge and a clear strategy, causes high stress levels and sometimes financial loss.
On the contrary, a life insurance plan is one of the safest and guaranteed routes for parking a portion of your hard-earned money. It will:
- Protect your assets
- Prepare you for facing future problems with way less financial stress
- Financially support your family in the event of your death Let’s explore how.
Benefits of Life Insurance in UAE
A recent survey reveals that 46% of UAE residents are focusing on signing up for a life insurance policy today.
Typically, a term plan is the most affordable course of action, requiring the policyholder to pay a fixed premium for a specified time. Suppose the holder passes away during the policy interval. In that case, their beneficiary receives a lump sum cash amount that pays off financial debts and funds everyday expenses.
Alternatively, a whole life insurance plan covers the policyholder for up to 95 years of their life with a death benefit and some cash values which are not guaranteed.
The promising benefits of life insurance in UAE ensure the policyholder meets their financial wellness goal in the following ways:
1. Monetary Cushion for Dependents
Suppose Ahmad (the policyholder) is the sole earning member of his family. Here, his death will cause a substantial financial blow on his dependents. But, if he has a life insurance policy, it will work as a valuable financial cushion to help his family cover:
- Children’s Education
- Loans and Liabilities
- Living Expenses
- Healthcare Costs
Life insurance benefits in the UAE include operating as a substitute income stream to support the policyholder’s family, removing the stress of starting life from scratch.
Additionally, this monetary support helps the family process their grief and provides adequate time for other members to step up and take responsibility.
2. Modifies Tax Liabilities + Provides Liquidity
In some countries, the policyholder’s inheritance requires their beneficiaries to pay costly tax liabilities. Here, life insurance significantly helps ease off the financial pressure.
Till date, UAE does not levy inheritance tax – making it extremely easy for beneficiaries to receive their proceeds. However, it’s advisable to establish a will in place for other assets in the country. Enforcing a will is time-consuming. But, insurance proceeds provide immediate liquidity while the probate process is underway.
Benefits of life insurance policy in UAE include immediate access to the death benefit (cash) that supports financial emergencies and lifestyles of members re-starting their lives again.
3. Critical Illness Coverage
Diseases don’t send arrival notices and often leave burning holes in one’s pockets. Today, you may be financially strong to face these challenges, but how will you manage if you lose your job or business tomorrow? Given these uncertainties, I would advise adding critical illness coverage to your life insurance policy.
This coverage meets the policyholder’s financial obligations during the diagnosis and post-survival phases of fighting the illness. Usually, policies cover 35 – 40 major critical conditions. Then, with a one-time cash benefit in hand, beneficiaries can sustain their lifestyle and focus on getting better without stressing about everyday expenses.
To maximize the benefits of critical illness coverage in UAE, sign-up for critical coverage that exceeds your income value. This extra security will comfortably take care of your & your family’s expenses while you’re recovering on a long unpaid leave.
4. Equal Estate Planning
As the family’s head, it’s natural to leave behind an equal legacy for your heirs. But, this is easier said than done.
For instance, Zaid is the sole owner of his dry-fruit business worth $5 million and assets worth $3.5 million. Out of his three children (Ilham, Sajid, Hassan), the first two contribute to the company’s growth. At the same time, Hassan lives a comfortable life outside the UAE.
Zaid wants to leave the business between Ilham and Sajid ($2.5 million each) and assets for Hassan ($3.5 million). But, this ‘unfair’ distribution leaves Zaid in difficulty.
Now, if Zaid signs up for a life insurance policy (worth $2 million), he can balance this situation.
Life insurance benefits in the UAE allow Zaid to compensate Ilham and Sajid with a policy worth $1 million each. This liquid and equal solution simplifies his real estate planning process.
5. Safeguarding Business Legacies
Most businesses are fruitful partnerships between family members, dependent on the business income for survival. So, the death of any involved member will cause financial pressure on many lives.
The benefits of a life insurance policy in UAE, through partnership insurance or key person insurance, involve naming the business as the beneficiary, with the
payout restoring professional operations and keeping the family’s life under control.
Buying life insurance is an important decision of your life. Start early to protect your financial interests. If you would like to learn about your best options and plans in the UAE, reach out to me (via the contact information below) or drop a comment. I will get back to you at the earliest.