Term Insurance is a form of life insurance that safeguards your family’s finances in case of your untimely demise for a fixed period. While purchasing the term insurance the insurance provider promises to insure your life in exchange for an annual premium. A term insurance plan is extremely beneficial if you are looking to ensure the financial safety of your family after your death.
Benefits of Term Insurance
- Low Premiums
- More beneficial if purchased at a young age
- High Sum Assured
- Pays the insured sum in case of death irrespective of the cause of death
- Add-ons can cover critical illness as well
- Accidental Death Benefit Coverage
- Life insurance till the age of 70
Factors to Consider while Purchasing term Insurance
You may have been often told to compare term insurance before purchasing one but what are the factors you need to consider while comparing the term insurance plan? Here are some tips:
Assess your Needs
Before you rush to your search engine to buy a term insurance plan, you should take some time to plan your finances. You are advised to assess your financial needs. Consider how much money your children will need for education. If you have loan debt, consider the amount of debt. Besides, consider your family’s daily expenses. Make a list of future needs. In case you want to save for your children’s wedding as well, take that into consideration too.
This might be a useful activity not only to purchase term insurance but also to plan your finances. Having an estimation of your debt and future expenses gives you a better grip over your financial needs and helps you understand how much sum insured you need. For instance, if you have a loan debt then you should plan to insure a higher sum for your family so that in case you pass away sooner than you anticipated, your family does not have to suffer to repay the loan.
Consider your income
Once your planning is in place, it is time to move to pragmatism. Your needs might exceed your income and your financial planning may be flawed. Therefore, you should always take your monthly income into consideration before making any financial decision. If the chasm between your income and your financial needs is wide, you should try to find a middle value to bridge this gap. For instance, let us say that you decide to purchase term insurance of AED 1 Million but the annual premium for the same is beyond your reach, you should consider reducing it to an amount that fits your budget. Remember! Your term insurance is useless if you are not able to afford and continue it.
Premium and Sum insured ratio
When all the cards are in place, it is time to start hunting. Check the insured sum offered by various term insurance providers. Compare the premium required to purchase the desire insured sum. To accomplish this task you should visit each insurance provider separately and see how much premium you need to pay. In case you find this activity demanding and time-consuming, you can visit online platforms that compare the premium and sum insured offered by various term insurance providers in a go.
Check the benefits offered
Comparing the premium and sum insured would give you a fair idea about which term insurance provider suits your needs the best. However, the process to choose a term insurance plan does not end here. Let us say you find that a term insurance provider is offering term insurance of AED 500,000 at a premium of AED 2,400 and another insurance provider is offering the same insured sum at a premium of AED 2,300. Naturally, you will be inclined to purchase the one with the lower premium. However, there is a possibility that the benefits offered by the cheaper term insurance provider are fewer. To avoid such a situation, you should always verify the benefits offered by each provider to understand if the benefits offered by them are the same otherwise you may end up buying cheaper but cheap term insurance.
Evaluate the claim settlement ratio
If you follow all the aforementioned tips, by the time you reach to follow this tip, you have made up your mind regarding the term insurance plan and provider. You already know which term insurance is the most suitable for you. However, before signing the deal, you should consider this last measure-evaluate the claim settlement ratio. Claim settlement ratio is a ratio of the number of times clients have raised a claim to how many times the claim was delivered. This will tell you about the performance of a term insurance plan. A company with a higher claim settlement ratio is probably more beneficial since it has a better track record of releasing claims. Purchasing term insurance from a company with a higher claim settlement ratio will offer you peace of mind.
How to buy term insurance in the UAE?
There are numerous ways of purchasing a term insurance plan in the UAE. Insurance providers allow you to purchase their term insurance plans both offline and online. To purchase term insurance offline you can directly visit the bank and meet the representative of the bank. In case you want to avoid the hassle and physical labor, you can purchase term insurance online. To purchase term insurance online:
- Visit the term insurance provider’s webpage
- Select term insurance
- Enter your details
- Select the term insurance plan
- Fill in your requirements
- Pay the premium
*Please note that these are general steps to purchase term insurance in the UAE online. The actual steps may vary according to the bank.
You can also choose to purchase term insurance through online brokers which allow you to compare and purchase term insurance easily.