Why is Life Insurance Important in Dubai?

It is likely that you are already aware of the importance of life insurance in Dubai; particularly due to the fact that we are living in what can only be called rather unpredictable times. So why are life insurance policies in Dubai important now?

As a starting point, these policies offer you a substantial amount of financial protection in the event that you happen to fall ill or even pass away. They offer peace of mind that you and your loved ones will be taken care of should this ever happen. There are also a number of specific benefits that are pertinent to those who currently reside in the United Arab Emirates. Let’s, therefore, take a look at life insurance from a general perspective before examining how it applies to residents of Dubai and other nearby areas.

Life Insurance Advantages: The Basics

The main intention of any life insurance plan is to provide financial remuneration to your loved ones and beneficiaries upon your death. These funds can be used to settle the outstanding debt, cater to relevant taxes such as inheritance tax or be a means to allow your loved ones to continue with their current lifestyle. There are likewise several packages that you can choose (depending upon your needs as well as those associated with any beneficiaries). From a very general standpoint, these can be segmented into the categories below:

1. Whole life insurance

Whole life insurance policies will provide you with a set payout that is valid for your entire life as long as you continue paying the monthly premiums. One of the benefits associated with whole life policies is the fact that you can often borrow money against them, as they represent a form of collateral. This could be very relevant if you happen to live in the United Arab Emirates and require a loan for personal or business needs.

2. Term life insurance

Term life insurance plans are arguably the most popular and simplest in regards to their mechanics. As the title already suggests, they are associated with a specific time frame that you can determine (usually measured in decades). The policy will remain active if you continue to satisfy the monthly premiums. If you cease paying premiums or should the term expire without any renewal, you will no longer be provided with coverage.

3. Endowment plans

Endowment plans are a third option to consider. While similar in many ways to the term insurance bundles mentioned directly above, there is one major difference. Endowment plans offer what is known as a maturity benefit. This essentially signifies that the policyholder will enjoy the ability to access funds even before your death. It may even be possible to select a subcategory known as a unit-linked insurance plan (ULIP). These packages are linked to specific assets such as stocks and mutual funds. Thus, they can be used as an investment opportunity as well as a standard life insurance plan.

Consultation with a financial professional is highly recommended in order to assess the different packages mentioned above and determine the most relevant solution to your needs.

The Relationship Between Life Insurance Policies and UAE Businesses

It is no secret that Dubai and the United Arab Emirates as a whole are home to some of the most successful start-up organizations on the planet. Due to continued economic growth as well as access to a truly global marketplace, it only makes sense that you might be considering such a venture. Alternatively, you could instead be looking for additional access to liquid capital. This is when a life insurance plan in Dubai can come in handy.

Small business loans can be difficult to come by; particularly if you do not have much collateral to offer an institution such as a third-party lender or bank. However, we need to keep in mind that money can often be borrowed against an existing life insurance plan. It is just as important to mention that some institutions may not approve a loan if one of these policies is not present.

A final point to emphasize involves the simple fact that many small business owners throughout the United Arab Emirates have a significant amount of capital tied up within their venture. What if an unexpected situation such as a severe injury or illness happens to occur? Without a valid life insurance policy, your loved ones could very well be placed in financial jeopardy. Having one of these plans in place will provide you with a peaceful mind in the knowledge that they are in good hands and have access to liquid capital. In other words, as opposed to having large capital amounts tied up in business, life insurance policies offer liquidity and access to cash when it is most needed.

Home Loans Within the United Arab Emirates

Are you considering residing in the United Arab Emirates for the foreseeable future? If so, it is likely that you will require a home loan at some stage. You might find it rather interesting that it is not possible to be approved for a home loan in Dubai if a life insurance policy is not present. Assuming that you do not possess such a policy, it is likely that the bank will require that one exists before the application process can begin again. As previously mentioned, this is where it is advisable to consult with a financial professional in order to determine the correct type of cover required for this specific need.

Furthermore, anyone else (such as a spouse) who may be listed on the loan will need to have a life insurance policy. This is irrespective of whether or not they are the primary income earner. The main issue here is that some policies that may be offered by banks can be quite expensive; placing further stress upon your existing levels of liquidity and disposable income. It is therefore a good idea to already have a plan in order to avoid excessive charges in the future and be able to manage your cash flow.

Protection from an Unpredictable World

Recent events have certainly illustrated that we live within a changing world; the most obvious being the COVID-19 pandemic. This is perhaps the most pertinent illustration of why a life insurance plan should always be present. In fact, the majority of experts state that you should begin thinking about which solution to choose even if you are below the age of 35. The longer policy is in place, the more wealth it will accrue over time.

Similarly, without adequate life insurance, there is no guarantee that the wealth you have worked hard to accumulate your entire life will be protected and pass on to your beneficiaries. In other words, life insurance is a fundamental building block of wealth protection planning.

There are countless business opportunities to be found within the United Arab Emirates and this economic powerhouse shows no signs of slowing down. Still, having a game plan in place from the very beginning will help you to avoid any financial issues that life may present. Be sure to take a look at the different providers as well as what each has to offer in order to make an informed decision.

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Blog published by Mike Coady.