Updated: Jun 28
This is not an exciting article about a fund tip or a secret share that will double overnight — but reading it might turn out to be the best tax-free return you, or someone you love, will ever receive. When I started my career in investments, we used to draw diagrams showing the pillars and roof of financial advice. This was comprised of investments, savings and pensions through Equities, Mutual funds and Fixed Deposits. However, I was always taught and practiced that the most important part of financial advice is, ensuring my clients have adequate protection laid down. Despite this being the critical element of financial planning, the reason I am writing about protection now, is that I have crossed mid 40's and my friends are beginning to not only lose their parents, but suffer serious illnesses themselves. In the start of 2021, two of my friends have had life changing critical illness situations and another young colleague of mine lost his life on a tragic road accident on Abudhabi - Dubai speedway, for no mistake of him, leaving behind his older parents, his spouse and 2 little angels. Deeply saddened hearing his untimely demise, happy that he had financially secured his family with an adequate whole of life insurance cover in addition to my company's group life cover. These unfortunate events rock the foundations.
When it comes to finances, people often think: we need to invest some money; let’s review our pension provision; let’s go and buy a property which gives a rental income. But very few people wake up and think, “I’m going to buy some life cover today.” It’s not an exciting Friday task. But it is a crucial decision for you and your loved one's. If you had something in your house worth AED 1 million, you would certainly insure it. So why do so many people take the risk of not insuring themselves?
The latest figures from the Statista shows 0.7 % of UAE Expats and Nationals have some type of life insurance. Despite high GDP levels, the penetration rate of life insurance in the UAE remains low similar to other countries in the Middle East. As talking about protection can be such a boring conversation, it’s little surprise that not everyone is fully clued up about the different types of protection available in the market. You can take out a life insurance to cover the whole of your life or for a particular term, and it is assured to pay out, because we will all definitely die. So make sure you get as much cover as you can as young as you can, because it will typically be cheaper. You are never going to be younger or healthier than you are now, and you never know what could happen next — so now is the time. Insurance companies often wanted to insure only healthy people. Of course, it’s important to understand that with these policies you are effectively placing a bet with an insurance company, and one which you hope you lose (because all will have gone well with your life). But the truth is that with this type of cover, you will never be happy. If you make a claim, something terrible has happened. If you do not, you may feel you have wasted your money. Nonetheless, the peace of mind of having that safety net in place can be hugely valuable.
For example, I have had couple of clients recently claimed on their critical illness cover, who had only been paying their policies for just over an year and received USD 200,000 and USD 57,000 respectively. Both payouts were tax-free and instant. In the first client’s case, after I told him he could claim on his critical illness cover, he was back to work in just eight weeks. I personally believe that having the cover in place, and knowing that he and his family would be financially secure no matter what happened, aided his recovery faster.
In the second client's case, a house wife, she was a joint life holder with her husband, suffered from Cryptogenic Stroke condition with no etiology, treated at a specialty hospital in Dubai which is covered by her husband's company Medical Insurance. She was admitted for only 4 days in the hospital. Her claim was paid out in just 7 days.
If you have a family, cover yourself so your dependents can continue the financial life you wish for them. I know that some will see this article as a sales pitch for the insurance industry. .But I am happy to take any criticism for raising the issues here. As an adviser, the most important part of my job is making sure your financial plans continue, even if you don’t.
Get in touch with me for a free consultation and I can help you secure a need based protection plan
Life & Critical Illness Insurance Specialist
Mobile: +971 55 549 0514