Family is the most important thing in the world and we would do anything to keep our loved ones happy. But believe or not, over 50 per cent of UAE residents are inadvertently exposing their family members to the risk of a major financial setback by not opting for a life insurance cover. These revelations come from a recent survey conducted by Friends Provident International (FPI).

Every working adult must buy a life insurance plan to secure their family members financially in the event of an unexpected tragedy such as death. However, due to reasons such as lack of proper knowledge and misconceptions about the cost of policies, a majority of UAE citizens have avoided taking life and critical illness insurance cover.

Is life insurance expensive?

According to the FPI survey, of the people who don’t have life insurance, 36 per cent consider life insurance policies too expensive. True, life insurance is an ongoing financial liability, but the benefits outweigh the cost. Plus, insurance plans can be optimized as per your needs and the cost does not always have to burn a hole in your pocket. Insurers offer plans that work for all types of budgets and financial situations. Also, the premium will be relatively cheaper if you buy an insurance cover at a young age.

[Related: The 5 Insurance Policies Everyone Should Have]

Is it mandatory to buy life insurance?

Unlike third party car insurance or health insurance coverage, it is not mandatory to buy a life insurance cover in the UAE. However, that does not mean you should delay getting one or avoid it altogether believing you are young and healthy. No one knows what the future holds and the tragedy of a sudden death can magnify if there is no financial cushion for those left behind. Think of how devastating the situation could get if you are the sole breadwinner in the house. While life insurance cannot ease the pain of tragedy, the least it can do it is take care of the financial end of things and ensure that your family does not suffer more than it already has.

Here are three reasons why life insurance is a must-have…

  1. It protects your loved ones: From securing your child’s education to ensuring that your spouse is financially secure, a life insurance plan provides much-needed financial security to your dependents.
  2. It helps deal with debts: The financial liabilities of a person can pass on to immediate family members in the event of their death. With the right insurance cover, you can help your family take care of debts such as home or personal loans even if you are no longer around.
  3. Peace of mind: Life is unpredictable and no one can foretell their fate. With a life insurance cover, you can breathe easy knowing that your loved ones would stay financially secure in the face of tragedy.

[Related: Different types of life insurance, simplified]

What type of life insurance plan is right for you?

Life insurance plans come in many variants. Here are the basic types of plans you can choose from…

Term Insurance

This plan offers financial coverage to the policyholder for a defined period of time. The beneficiaries can make a claim if the insured person dies during the policy term. Term insurance plans are generally affordable and may also allow renewal or conversion to a whole life plan.

Whole Life Insurance

As is clear from the name, this plan covers an individual for their entire life. Moreover, under this plan, a portion of your premium builds cash value which can be borrowed against during emergencies. While the premiums are generally higher, this plan assures a guaranteed sum of money to the beneficiaries in the event of the policyholder’s death.

Endowment plans

This is quite similar to term insurance with one key difference – It also acts as a savings plan. In other words, unlike term insurance which does not pay out if the policy-holder survives the term, endowment plan is designed to pay a lump sum after a specified term – either on maturity or the death of the insured.

This isn’t an exhaustive list. Apart from the ones mentioned above, there are many other life insurance plans you can opt for depending on your needs and budget. And always make sure you do your homework before signing up!