Since nothing in this world is certain, people take precautions like setting aside money for emergencies or buying an insurance policy.
That doesn’t mean you have to buy all the insurance products available in the market today. The key is to know what your priorities are and how much you can afford. There are cases where getting an insurance is mandatory, such as when you buy a car. Certain circumstances, like when an individual is heavily in debt, also call for an insurance.
Rupert Connor of Acuma Independent Financial Advice, says there are two main circumstances in which it is ideal to take out a life insurance, the first is as soon as you have a debt, and the second is when you have people depending on you for financial support.
It’s also a good idea to consider it if you’re going through certain changes in circumstances, such as when you’re becoming a parent, getting married, becoming the main breadwinner in the family, your partner is losing a job, you’re moving home or buying a house.
“You need to ask yourself who would be affected by your debt should anything happen to you and are you prepared for the family to take responsibility for it. I imagine the answer is no, so it is best to be responsible for your life rather than bankrupting your family,” he says.
“Secondly, if you have dependents such as a partner or children, then it’s generally a good idea to take out some form of life insurance. Then, if the worst does happen sooner than expected, you will have the peace of mind that your nearest will still be able to afford to live in comfort after you are gone.
Anand Majmudar, associate manager at Gargash Insurance, says all class of insurance is important for individuals from all walks of life, but one has to understand “what each insured thing or living thing holds significance in one’s life”.
“As far as choosing between life, car, homeowners or fire insurance is concerned, one needs to prioritize it in the right manner,” he says.
Whatever it is that you intend to insure, here are a few tips to consider before parting with your cash:
• Do some research. Collect insurance quotes from various providers. Several insurers in the UAE have online facilities in place to provide you with a sample quote.
• When dealing with an insurer, make sure that they are established and duly licensed. Get some feedback from colleagues or friends who deal with them.
• Beware that not all policies provide the cover you need and the cheapest premium is not always financially beneficial. The sum insured may be too small to cover your day-to-day expenses in times of disability or serious illness.
• Understand the terms of the policy. Read the fine print to know what you’re getting and discuss it with your broker or agent. Ask for simple explanations on what specific situations or cases are covered and which ones are not.
• Some insurance claims can take a long time to settle. Find out how the claims process would normally work and what documents they would require when you need to make a claim.