Top 5 Benefits of Term Insurance in UAE

A term insurance policy, the simplest form of life insurance, is solely designed to financially cover the family and dependents of policyholders in their absence. It promises a guaranteed death benefit if the insured individual dies within the policy period. 

While term insurance offers high coverage for an affordable premium, it does not provide maturity benefits. The primary goal of purchasing a term insurance policy is to give financial stability and life protection to the policyholder's family.

Before investing in a term insurance policy in UAE, it is essential to assess the benefits that you would receive and evaluate whether it matches your requirements. In this article, we will explore the basics of term insurance and its top benefits so that you make a well-informed decision.

Term Insurance Policy in UAE: An Overview

The functioning of term insurance is quite straightforward - the insurer pays the sum assured to the dependents of a policyholder in case the latter passes away during the policy tenure. These plans are offered to individuals for a stipulated time frame or 'term', which could range from 5 to 60 years. 

The benefits of a term insurance policy are plenty. This plan ensures that the dependents’ financial requirements (monthly expenses, education, and more) are met after the demise of the policyholder.

Term Insurance Policy in UAE vs Life Insurance Policy in UAE

Term insurance is fundamentally a type of life insurance. A life insurance policy is designed to provide dual benefits to the policyholder and their families, i.e., life coverage along with a savings component. 

A term insurance plan, however, has no saving component. These plans are formulated to offer only death benefits without any survival/maturity benefits, unlike life insurance policies.

What are the Key Benefits of Term Insurance in UAE?

Term insurance policy, playing a major role in securing the future of policyholder’s dependents, is considered to be one of the essential financial requisites of 2023. With these plans, one can expect manifold features and benefits, with the most prominent ones discussed below -

High Sum Assurance with Reasonably-Priced Premium

An affordable premium range is one of the main advantages of a term insurance policy due to its restricted term and single return as a death benefit. These plans are pure protection plans with no ancillary advantages or investment components attached. 

Additionally, term insurance plans come against a specific premium that is fixed for the entire policy tenure – no matter what stage or age of life you are in.

Better yet, these plans offer substantially high coverage at quite low premium rates. Multiple insurance providers in the UAE offer term insurance plans at premiums that can easily fit your budget and offer various coverage options such as premature death coverage, terminal illness, critical illness, accidental disablement, accidental death coverage, and more.

Another notable benefit of these plans is that they can easily be customised as per your needs and budget. Some insurers also provide flexibility in paying premiums, like a lump-sum instalment or an option of monthly, quarterly, or yearly instalments (regular or increasing), or a combination of both.  

Premiums are Locked for the Entire Duration of the Plan

As stated earlier, the premium of term insurance plans is reasonable and remains fixed for the plan's entire duration. Simply put, the insurers will lock the premium that you will be paying this or next month or year till the term of the plan. With these fixed premiums, you can easily plan out your finances and incorporate the plan into your every-month budget.

Easy to Comprehend

One of the reasons for the growing popularity of term insurance plans in the UAE is their simplicity. Term insurance plans are easy to understand and comparable without bells and whistles.

All you need to know is that the term insurance policy helps the nominee/beneficiary of the policy fulfil their requirements by giving them the sum assured amount in case the policyholder passes away. Thus, by simply paying the premiums on time, you can keep the policy active and have financial assistance for your family ready in case of any unfortunate event.

Financial Assistance and Security

The core benefit of term insurance plans is that these plans promise a sum in case of the demise of the policyholder during the policy tenure. This benefit ensures that the nominee or dependents can take care of their living expenses and future goals even if the policyholder is not around them. 

These plans also provide the option to receive the sum assured in the form of monthly payouts or as a lump sum amount. With this, the dependents can easily manage their regular expenses and meet financial obligations without any financial liabilities.

Additional Riders to Strengthen Policy

Most term insurance plans come with optional riders that you can choose to enhance the coverage provided by the standard policy. These riders/add-ons of term insurance policies include accidental death coverage, permanent and partial disability coverage, critical illness coverage, accelerated death benefit coverage, income benefit coverage, premium waiver coverage, and many more. 

As a policyholder, you can choose any of the riders that align with your needs and budget to strengthen your policy by paying a little on the top.

Let’s discuss some of the benefits of riders below – 

• Accidental Death Rider: If the policyholder passes away due to an accident, this cover pays an additional amount along with the death benefit coverage amount. Each insurance company has a different set percentage per their policies for this, with the cap on this rider generally being set up to the maximum sum assured amount.

• Permanent and Partial Disability Rider: This rider can be highly beneficial if the policyholder meets with an accident and faces permanent or partial disability. Insurers can provide a fixed amount regularly for a specified period following the accident, which can help the individual manage their regular expenses.

• Critical Illness Rider: With this rider, the policyholder will get a payout if they are diagnosed with a critical illness in the policy tenure. It is important to note that critical illness must be pre-specified in the policy.

• Premium Waiver Rider: This rider ensures that future premiums are waived if the policyholder loses their job, becomes disabled or critically ill, and so on while keeping the policy active.

• Income Benefit:  Along with the death benefit, the dependents can also get additional annual income for a specified time under the 'income benefit' rider in case the policyholder passes away. This income is usually calculated as per the income of the policyholder before their demise.

• Accelerated Death Benefit: This rider comes into action in case the policyholder suffers from any terminal illness and they are unable to pay their heavy medical bills. Using this rider, the insured can get a portion of the sum assured amount in advance, which they can use to tackle the critical situation at hand.

Over to You!

There is an increase in the demand for term insurance plans in the UAE. Term insurance plans certainly appeal to most of us, considering the features and benefits they provide to the policyholders and their beneficiaries in case of any unfortunate event. 

With their benefits, these plans offer peace of mind concerning the safety of our near and dear ones. However, before opting for a plan, it is crucial to understand the benefits of a term insurance policy as well as your family’s requirements - this can help you get a plan that truly matches your requirements and caters to your family's needs in uncertain times.