Today, life insurance should be a necessity for most people and not simply a want. After all, you can be sure your loved ones are protected in case you have an accident or untimely death when you have the right coverage.
Life insurance in the UAE can also act as a savings or investment vehicle. You can enjoy this advantage when you opt for whole or universal life coverage and additional policies. Moreover, it serves as a safety net, giving you peace of mind that your financial obligations, such as a mortgage, will be covered.
With these benefits in mind, getting life insurance should be at the top of your priorities regardless of your age.
What to Ask When Choosing Life Insurance
Since getting a life insurance plan requires a long-term commitment and investment, you need to ensure you’re buying the right one and can fulfil all involved responsibilities.
You can ascertain if you’re making the right decision by asking these crucial questions:
- Do I really need life insurance?
This is one of the most important questions you should ask yourself before getting a life insurance plan. You have to think about why you need it and if the benefits are worth your investment.
When asking this question, think about your current and future situation. Are there people depending on you financially? Are you planning to start a family soon?
If your answer is yes and you want to ensure your loved ones can still have an income to depend on, buying a life insurance plan is a must.
Also, consider the debts your family may have to shoulder when you are unable to do so. Look into your current financial situation as well. Do you have enough savings to cover all your obligations even when you are unable to earn income?
If you want to avoid passing on financial burdens from your loans, life insurance provides the ideal solution.
- Am I too young to get life insurance?
If you’re already earning, you can buy a life insurance policy even if you’re in your early or mid-20s. And if you get them when you’re still young, you can reap additional benefits.
For instance, premiums are generally lower when you’re young and healthy, making the insurance more affordable. Obtaining a policy early also locks in lower rates and ensures coverage for your future dependents, such as your spouse or children.
Your chances of getting approved for your policy are higher when you obtain life insurance in your 20s or 30s.
- What type of coverage should I get?
This is a question you can answer on your own or with the help of an agent. Basically, there are two main types of life insurance: term and permanent.
Term life insurance provides coverage for a particular period, typically 10, 20, or 30 years. It is usually the best option if you’re looking for something affordable and only want temporary coverage, such as during the years you’re paying off a mortgage or raising children.
On the other hand, permanent life insurance, which includes whole and universal life, offers lifelong coverage. It also has a cash value component that grows over time. Although it is typically more expensive, it provides remarkable benefits, such as savings and investment opportunities.
When choosing between the two, think about your financial goals – are they short-term or long-term? Also, consider your budget since you have to pay the premium for many years. Assess your long-term financial plans, dependents’ needs, and potential debts to make an informed decision as well.
An insurance agent and financial advisor can help you choose the right policy and tailor it to your unique situation when needed.
- Who should be my beneficiary?
Your beneficiary is the person you designate to receive the policy’s death benefit. This person can be your spouse, children, or other dependents who rely on your income. You can also choose a friend or charitable organisation to be your beneficiary.
If you are married and live in a country or state with common property laws, your spouse is automatically your primary beneficiary. You may need their consent if you put another person’s name on the policy.
You may also encounter some difficulties if you name your underaged children as your beneficiaries since minors cannot legally manage their own money.
To make sure you choose the right beneficiary, consider their potential financial needs. Ensure they will use the funds to cover essential expenses such as mortgage payments, monthly rent, education costs, or everyday living expenses.
Additionally, review your decision regularly and update your beneficiary when important changes come up, such as after marriage, childbirth, or a pay raise.
- When should I expect returns?
Understanding when you can expect returns from your life insurance plan is crucial, especially if you have a policy with a cash value component. Since these types of coverage accumulate cash value over time, you can borrow against this or withdraw a certain amount of money.
The growth rate and availability of returns depend on the policy terms and investment performance. You should ask the insurance agent about the timeline for cash value accumulation, potential dividends, and any relevant conditions.
If you’re considering a permanent life policy, you must wait several years before it generates considerable cash value. You should also know that cash value growth is not guaranteed on all types of permanent life insurance, so be prepared for this possibility.
You can then plan for your long-term financial goals more effectively and have realistic expectations about the policy’s benefits.
- How do I have to pay for my life insurance plan?
The cost of a life insurance policy varies based on several factors, including your age, health and the type and amount of coverage. As mentioned, term life insurance is generally more affordable, while permanent life insurance is more expensive.
Request detailed quotes from several insurance companies to know the cost of your potential life insurance plan. When you receive them, check the premium, payment terms and other possible fees.
Make sure you choose a policy that fits your budget while adequately covering your financial needs and giving your beneficiary peace of mind.
Although a life insurance plan means additional expenses, you can reduce your anxieties about the future when you have one, especially when you choose a policy that suits all your needs.
