Only a small fraction of UAE residents have life insurance
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Only a small fraction of UAE residents have life insurance

Life insurance can be a touchy subject that no one really wants to talk about, but the consequences of not planning for all of life’s eventualities are even more daunting. Should you fall seriously ill or die unexpectedly, a lot of things can happen to your loved ones in the UAE, and one of them is that your spouse or children could be out of pocket.

According to a consumer research study commissioned by HSBC, titled: Power of Protection: Confidence in the Future, the UAE ranks second highest globally (behind Indonesia) for people financially supporting a family member, yet only a small fraction of residents have sufficient life and/or critical illness cover.

In this week’s article, we look at some of the general perceptions that people have towards life insurance in the UAE, and provide an overview on everything you need to know about life protection policies.

Consumer perceptions of life insurance in the UAE

One key takeaway revealed from HSBC’s Power of Protection study is that many see life protection policies as a cost rather than an investment for the future. This comes despite the fact that future health and its impact on loved ones is one of UAE residents’ greatest concerns. While about 9 in 10 (89%) of residents are supporting a parent or child financially, 79% of residents do not have a life protection policy in place to safeguard the future of their loved ones.

As shown in the graph below, when investigating why only a small fraction of people in the UAE have life insurance, the HSBC study found that 60% of respondents who have considered securing this type of insurance have not taken the policy out yet because they are not sure of what to expect or they think it is too expensive.

Almost half (46%) say they are unaware of how to secure the policy, are concerned about exclusions, or are not confident it would pay out. Around one third (32%) of residents say they are too busy to take out this policy, or leave it to someone else to arrange coverage. Lastly, a quarter (25%) say they have not needed it so far or do not consider it a major priority.

life insurance HSBC survey

Source: Adapted from The Power of Protection: Confidence in the Future (2016)

Uncertainty about life policies in the UAE is also evident when looking at attitudes of residents who have secured this type of plan. According to the study, more than half (56%) of people with life cover they have paid for do not know what their payout would be or think it’s too low. This percentage is even higher (61%) for those who have life policies taken out by an employer. That said, 44% of respondents understand what their payout would be and think it is sufficient.

To clear out some of the confusion regarding life protection plans in the UAE, we’ve included an overview of what you need to know about securing life insurance below.

What is life insurance?

Often described as “the cornerstone of good money management”, life insurance helps people prepare for all eventualities. In short, they provide financial support for your loved ones, and possibly yourself, in the event that you fall seriously ill, become disabled, or die.

As one of the most popular forms of life protection policies, term life & critical illness insurance* pays a cash sum if the unthinkable happens during the time period for which you are covered. For example, should you become diagnosed with a terminal illness like cancer, the payout amount will help cover the costs of future arrangements, trying to get healthy again, and all of the other things you would like to take care of.

Other plans may pay smaller amounts over a predetermined period of time to the family of the deceased. This period usually lasts until your children become financially independent. In the meantime, the amount paid out will help with costs such as day-to-day expenses, housing, education, etc. 

*The critical illness portion of the policy increases the number of serious illnesses that you can receive a payout for. Please note that while many life policies will include coverage for critical illness, not all of them do.

Who needs life insurance?

Generally speaking, if someone were to suffer financially should you become seriously ill or die, you’ll most likely need a life protection policy. To help, we’ve outlined below how the policy might apply to different scenarios.

If you are single

Single people who have parents, siblings, or other family members who rely on them financially will likely need this type of policy. It’s also important to note that life protection policies are likely going to be cheaper the younger and healthier you are, so now can be the best time to arrange life cover.

If you are married

Those without children often think that they don’t need life cover. One thing to think about here is whether your spouse will have enough income to pay off debts and cover their rent and bills. If the answer is no, life cover can ensure that your spouse’s needs will be taken care of.

If you have a spouse and children

If the unthinkable happens, will your spouse have enough money to maintain the same standard of living for themselves and your children? There’s also future costs like your children’s university education to consider. Life policies ensure that your plans for the future don’t expire when you do.

If you are a small business owner

What would happen if your key employees or co-owners pass away unexpectedly? Besides taking care of your family, life protection policies can also safeguard your business in a number of ways.

What to expect when applying for life insurance

Once a person applies for life cover, in most cases they will need to answer a questionnaire about their health history. Insurance companies may also require a full medical examination of their client before taking them on, which can include multiple tests, such as:

  • Drug test
  • HIV test
  • Physical exam
  • Blood samples
  • Electrocardiogram
  • Prostate specific antigen test (for men only)
  • And more

*Not every type of life policy will require full medical exams. For instance, a ‘guaranteed issue life policy’ can be secured without any medical examination. Premiums for this type of policy, however, will usually be a lot higher.

Once the insurer has all the relevant information they need about the applicant, they will go through the underwriting process and decide if they want to insure the applicant, and what the appropriate premium will be. Insurers will consider the applicant’s age, sex, medical history, country of residence, etc. to decide on the inherent risks attached to the applicant.

How UAE Medical Insurance can help

With years of experience working with the UAE’s most reputable insurers, UAE Medical Insurance has a range of life protection solutions available that can be tailored to meet your budget requirements, allowing you to increase or reduce cover levels, as well as increase or decrease the cover term.

Securing life cover is a very important decision to make, which is why it often helps to talk to an experienced broker like UAE Medical Insurance to get answers to all your questions, as well as impartial advice from an insurance expert. To learn more or get a free quote, contact us today.


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Registered Office: PO Box 391195, Dubai, UAE