The decision to buy term insurance is often met with hesitation, confusion, and denial by most of the UAE residents, according to Mr. Neeraj Gupta, CEO of Policybazaar UAE.
With too much misinformation being circulated about often misunderstood Term Insurance, it’s really important to separate the facts from fiction around buying one.
Here are 8 myths that you may come across while buying Term Insurance.
Term life insurance plans are restricted to death benefits, hence it’s a waste of money.
Reality: The majority of people think that term insurance plans do not provide a lump sum amount at maturity, so they are a waste of money. While the fact is that the “Term plan is pure protection plan” that provides financial security to the dependents, in case of demise of the policyholder. It acts as a financial cushion that will ensure that your loved ones do not have to go through financial difficulty when you are not there.
Also, Term insurance providers offer several riders. You must opt-in for these riders as they benefit with additional lump-sum payments in the case of critical illness, permanent and total disability, and loss of limb, as a result of an accident. These riders do enhance the overall protection quotient of the plan, at a very nominal price.
I am single and young, I don’t need Term insurance.
Reality: It is a misconception that if you are not married or don’t have children you do not need to buy term insurance. While it’s important to buy Term Insurance for anyone who doesn’t want to be a financial burden on their loved ones. Also, think about how your aging parents or younger siblings will manage their expenses in case of your untimely demise. Moreover, you definitely wouldn’t want your family to bear any outstanding debts like your car loan or home loan, etc. Thus, you don’t need insurance at a young age, which is a myth that needs to be debunked as the sooner you buy, the cheaper it is for you.
Corporate Term Coverage is enough.
Reality: Your employer’s coverage ain’t enough to cover the anticipated expenses for your family’s future, so it’s always wise to get a Term insurance policy of your own. The corporate term insurance plans are only valid until the time you’re an active part of the organization. Once you leave the company the corporate coverage is no longer valid and you’re left with no risk protection at all.
A Term cover equal to my present annual income is enough.
Reality: Typically your term insurance cover must be 10 to 15 times your current income so that your family can maintain and sustain their livelihood without compromising on anything. While choosing your sum assured do keep in mind your liabilities including any outstanding loans. You should have an amount that’s enough to adequately cover the costs of living for your family or anyone else dependent on your income.
Buying Term insurance is expensive.
Reality: Buying term insurance is not an extravagance, rather it’s worth considering. It’s important to understand that you could buy term insurance at premiums that are as low as $2/month. Term plans offer extremely affordable premiums especially when you consider the peace of mind and coverage that it provides to you and your loved ones.
I’m an ex-pat so there’s no point in getting Term insurance in the UAE, we won’t be covered overseas.
Reality: Life expectancy in the UAE is much higher, which helps insurers price products competitively. Also, if your expenses and obligations are in Dirhams, your financial protection should also be in Dirhams. There are many renowned insurance providers that offer international Term cover which you can take with you when moving overseas or repatriate home.
Term Insurance plan does not provide Proper Claim settlement.
Reality: There is no possibility of claim rejection by the provider if you’ve filled all the documentation correctly and you had paid the premium on time. Still, we say that it is extremely important to get a detailed insight about the claim settlement of the provider to get an understanding of the background of the company. For this, online web aggregators are one of the most convenient and trustworthy medium of purchasing term insurance plans in the UAE.
Buying Term insurance is a lengthy process.
Reality: With most plans available online, the process to buy Term insurance has become more convenient and easy as you can buy a plan in a few clicks. In fact, buying online lets you compare between different plans and choose the benefits as desired by you, decide policy term and sum assured, get the quote and pay premiums online. Thus, this is one of the myths about term insurance that is no longer true now.