Nobody wants to contemplate that they’ll one day face a serious health issue. It’s easier to bury your head in the sand and hope the worst will never happen. That’s why health insurance is one of those things everyone needs but few people have.
An alarming 2018 survey by Friends Provident International (FPI) conducted by YouGov revealed that more than half of the UAE residents don’t have any life insurance coverage at all, while only a quarter were covered against serious illness – many of them believing it to be too expensive.
Living life to the full is important, but so is being ready for any eventuality, especially if you have a family. Here are seven things you should consider if you are unsure of the benefits of getting a proper life insurance plan in place – and how to do it with minimal hassle.
It protects the people who depend on you financially
Many of us have loved ones who rely on us completely such as spouses and children – but increasingly also elderly parents. If you are the main breadwinner, taking up insurance will offer peace of mind to you and them should you be unable to work.
“Think about how much income your family would need if you were no longer in the picture,” advised Jamie Fletcher, a senior adviser at Globaleye. “Think about housing, schooling, university, travel and so on. Work this out on an annual basis and then use the children’s non-dependant age – such as 21 years old – as a rough guide to how many years you’d need to calculate. For example, say your costs are $100,000 per year and your youngest child turns 21 in 15 years’ time, the rough calculation would be $1,500,000.”
It guards against unforeseen events
You can’t know what’s going to happen tomorrow and that’s why life insurance is important whatever your age or position in life. “Take insurance when you’re young, because no-one knows when their time is up, so don’t delay as it may turn out to be too late,” added Fletcher. “Secondly, the younger and healthier you are, the cheaper your premiums will be. Usually when you take a life insurance policy your premium won’t change in the future. The longer you leave it, the more likely you’ll develop health issues which can bump up your premium.”
Dilip BM, senior wealth architect at Elixir Wealth Solutions added that people need to include critical illness and permanent disability insurance as well. “In the event of critical illness or permanent disability, the person is still alive but needs long term treatment,” he explains. “The lump-sum amount received during this period will take off the living expenses. This may be termed as the living benefits of insurance.”
It can wipe out debt
If the worst scenario does happen, life insurance would help pay off any debts such as credit cards and a mortgage – ensuring those left behind don’t carry the burden. “Even a single person with no dependents need a life insurance policy, maybe with a smaller benefit amount so that it takes care of any loans which might need to be paid off by his or her relatives,” said Dilip BM.
Work coverage (gratuity) may not be enough
In the UAE, employees are entitled to full work coverage pay – aka gratuity – based on 30 days salary for every year of work. However, for people whose salary is not sky high this amount might not be enough to fully take care of things after death. Life insurance offers another valuable layer of support, says Dilip.
It’s more affordable and flexible than you think
There are some great life insurance products around that offer not only affordable plans, but also flexibility. A good example is the Future Saver investment plan by Standard Chartered, which allows you to save and protect your wealth with free investment life cover. This product has the option to add life insurance cover of up to five times your yearly regular premium, providing a safety net – particularly if an unfortunate event occurs early in the policy term where you would not have had time to accumulate contributions to your financial goal.
It can protect your home
Getting a good life insurance policy for at least the amount of your mortgage means if you pass away during the term when the policy is in force, your loved ones receive the face value of the policy. Your mind will be at ease knowing your family can use the proceeds to pay off the mortgage, say the experts.
It can assure your children’s education
As a parent, you obviously want the best for your kids and a big part of ensuring their bright future includes a college education. Therefore, knowing that if you were no longer around their education and security is assured will be a weight of your mind. And with occupations that require post-secondary education expected to grow through 2024, a life insurance policy can spare your child from sacrificing his or her dreams and offer relief from student debt.
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