When an earning member of a family dies and if the member had not bought adequate life insurance, other members of the family who have been dependent on him may have to pay a terrible price for no fault of theirs. The income on which the edifice of their lifestyle has been built is no more available for them. This means they cannot live the same lifestyle any more.
Some people may argue that the very purpose of earning is to enjoy life to the fullest and so, they squander their money. But their argument is not only untenable but is skewed thinking as well. This wrong notion can prove to be disastrous for themselves and their families. In fact, when a person gets married, it means he has reached a stage when he cannot afford to delay buying life insurance. Of course, even unmarried folks can also invest in life insurance for planning their retirement, helping others or for various other purposes.
Experts advise that as soon as a person gets married, he should draw a road-map for planning his finances to secure his future and that of his family members. Life insurance tops the list of suggestions given out by experts for financial planning. There is definitely a strong logic behind their suggestions and it is that in the event of the unfortunate demise of the insured, his dependents will not suffer.
In short, life insurance is nothing but a financial plan that you buy from an Insurance Company for providing cover as well as financial protection for your family or loved ones in the unfortunate event of your demise. The plan can provide cover even to your partners or business upon your death. Once you buy adequate life insurance, you can have peace of mind that money will be available for your family even after you breathe your last so they can take care of a number of things.
- They can pay for your funeral expenses
- They can utilize the money for providing good education to your children.
- They can use the money to pay off the debts including the mortgage loan. This means there may not be any necessity for them to sell the property under mortgage for sustenance and staying solvent.
- The money can replace the income of your spouse. If, unfortunately, your spouse who had all along been earning, passed away, you can replace the income so you can continue to lead the same lifestyle.
- If you have been doing a business along with other partners, you may benefit by insuring the lives of your partners. If the partners unfortunately die, you can buy their interest in the business from their heirs.
But how much life insurance should you buy?
The death benefit also called as the face amount of a life insurance policy must be sufficient enough to replace the income you are earning so your dependents need not change their lifestyle. This means the amount of insurance you must buy depends on the income you currently earn and the likely incomes you may earn in future.
Experts suggest that you should buy life insurance equal to 10 to 30 times your annual salary. The aim is that your family members must get an ongoing income even after your unfortunate departure from this world. The best way for achieving this aim is to park a lump sum in products like Bonds that can fetch them an ongoing income. But you cannot buy an insurance plan, the premium of which you cannot afford to pay. Experts categorically say that everyone should buy at least some insurance for covering their life. It is better than having none.
We, at AFIA Insurance, have Regulated Experts with us and these experts are always ready to help you in finding the the best insurance company for buying your life insurance.
Types of Life Insurance
The two main types of Life Insurance available in the UAE are Whole of Life and Term Insurance.
Whole of Life
Though this plan covers the life of the insured, it contains an investment element as well, though it need not be the case always. This plan will get your dependents a lump sum upon your death, regardless of when that occurs. You have to continue paying your premiums which means even after you retire or even if you are not earning, you must make a provision for paying the premiums.
Insurance companies from which you buy your Whole of Life insurance plan will invest the premiums you pay appropriately for ensuring that the annual cost of the premiums will remain the same throughout. In general, the premiums of a Whole of Life policy will be higher than that of a term policy with an equal face value. Remember that by buying a Whole of Life policy, you are covering your life till the end.
The term of a Term insurance policy may range between 1 and 30 years. Once the term ends, you need not pay your premiums. Similarly, your life will cease to be covered once the term comes to an end. In general, the annual premium amount you pay for your term insurance policy is less than that of a Whole of Life policy with an equal face value. But if you want to continue your cover after the term comes to an end, you may have to pay substantially increased premiums.
You can rest assured that you will have life cover till the term period which means the insurance company will pay the death benefit in the form of a lump sum if you die within the time-frame of the term. If you live beyond the term, you can claim back the premiums you have paid.
If you discontinue paying your premiums, the policy will not cover your life. Insurance companies may normally insist on a medical check-up after processing your insurance application.
You can include various other benefits also to your cover such as critical illness cover but you have to pay additional premiums for such add-on benefits.
Business Life Insurance (Keyman Insurance or Group Life Insurance)
If you are doing a business along with some partners, you can buy life insurance covering the lives of those partners. In the event of the death of the partners, the policy will cover loans, if any, that may have been availed for running the business. This includes all the business loans, car loans, etc. The aim is to ensure that there is no interruption in carrying out the business operations.
A company may also choose to insure the lives of senior directors and officers (known as keyman insurance) and often Group Life insurance is given as a benefit to all employees as part of their compensation programme.
Medical check-ups for buying a business insurance plan
Medical check-ups may be necessary for buying business insurance plans. These check-ups come free of cost and our regulated experts, in consultation with the insurance companies, organise them according to your convenience. These check-ups may consist only of height and weight tests or in certain cases, a complete medical screening may be insisted.
A few points to note:
- Remember that premiums may be higher if you are viewed as a high-risk person. Examples of such high-risk people are those with pre-existing medical conditions, smokers, over-weight people, those with family history, those involved in hazardous sports and people who live in certain specific locations. Though medical check-ups may be insisted for these folks, these people need not have any qualms about them. The aim of insurance companies is to make the entire process smooth, easy and quick. Insurance companies bear the costs of these check-ups.
- Insurance companies in Dubai offer single policies as well as joint policies. Premiums of joint policies are not expensive but pay-outs will be available for both the parties. Critical illness feature can also be added to the plans, if needed. But we recommend that couples should go for two separate single policies.
Why should you use our services?
Once you complete your life insurance application form and send it over to us, our qualified and trained regulated experts will take over. You can request for personalised quotes of the options available or the experts will forward to you all the relevant information. Remember that we offer these services to you without any obligation. You can also rest assured that all your details will remain confidential with us.
Our experts at AFIA Insurance will provide you with illustrations and make it easy for you to choose the right life insurance policy that perfectly suits your needs. Pleasesend us your enquiry and your dedicated insurance advisor will get in touch with you.