Whole Life Insurance Policy - An Informative Overview
Whole life insurance in Dubai, also known as a permanent life insurance policy, offers comprehensive financial coverage for your loved ones. This plan covers the policyholder’s entire life and ensures that your dependents are financially protected in case of your demise. It covers you for your lifetime and can include additional riders for extra coverage. The premium increases in such a situation. ...read more
A whole life insurance policy is a permanent policy that provides coverage for the insured person's entire life. Both the death benefit and premiums remain fixed throughout the policy’s duration.
Additionally, these policies can also build cash value from the premiums paid, which can be borrowed against or withdrawn. These are known as unit-linked or investment policies, and it's advisable to seek professional advice to understand them fully.
Alternatively, a straightforward whole life insurance policy with low-risk, managed funds provides a guaranteed payout upon death. The main advantage of whole life insurance is that it guarantees financial support for your loved ones after your passing.
Features and Benefits of Whole of Life Insurance in Dubai
Whole life insurance in Dubai offers a range of features and benefits including -
Lifetime Protection - Whole life plans in UAE offer coverage until age 99. Starting early helps maximise benefits, as the policy accrues significant value over time. Premiums are lower when starting young, allowing for higher coverage to counter future inflation. Unlike term insurance, which pays out only after the policyholder’s death, whole life plans, especially income and endowment plans, provide returns during the policyholder’s lifetime.
Financial Security from Day One - Whole life plans remain active even if premium payments are not made continually. The coverage begins on the policy date and lasts a lifetime, ensuring the sum assured is paid to nominees even if the policyholder dies prematurely.
Protection Against Health and Life Risks - Whole life insurance policies offer riders for critical illnesses, accidental death, or disability, alleviating the burden of medical expenses and protecting savings.
Lifetime Income - Whole life insurance policies provide a steady income during retirement, supplementing existing income and supporting daily expenses, additional ventures, or reinvestment opportunities.
Fixed Premium Rates - Premiums remain consistent, regardless of age or health changes. Some plans offer continued coverage post-premium payment, offering dual benefits.
Types of Whole Life Insurance Policies
In general, there are 6 main types of whole life insurance policies -
Non-Participating Whole Life Insurance - This policy offers fixed premiums and a guaranteed death benefit, providing predictable costs without paying dividends. It's ideal for those who prefer stability over potential extra earnings.
Participating Whole Life Insurance - These policies pay dividends based on the insurer's surplus earnings, which can be used in various ways. Though dividends are not guaranteed, this option offers the potential for higher returns but usually comes with higher premiums.
Level Premium Whole Life Insurance - Offers fixed premiums for life, with early payments covering future costs. It's suitable for those who want long-term budget stability without premium increases.
Limited Payment Whole Life Insurance - Requires premium payments for a limited period (e.g., 10 years), but coverage lasts a lifetime. This option is best for those who want to pay off insurance during their peak earning years and avoid future payments.
Single Premium Whole Life Insurance - Involves a one-time lump sum payment that funds the policy fully. It's a good choice for those with a significant amount of money to invest upfront while securing a death benefit.
Indeterminate Premium Whole Life Insurance - Premiums adjust yearly based on the insurer's financial performance. This policy offers potential savings and flexibility but requires attention as payments can fluctuate.
There is another kind of categorisation of whole life insurance in UAE which has 2 types of whole of life insurance -
Whole of Life Pure Protection - This policy lasts your entire lifetime, so insurers will review your medical history when you apply. If you have serious health conditions, you might pay higher premiums or face rejection. All medical conditions must be disclosed during the application.
Whole of Life Investment-Linked - This lifetime policy not only provides a life insurance but also offers a chance to earn extra money. There are two types:
With-Profits Policies - The insurer invests your premiums to generate returns for the eventual payout.
Unit-Linked Policies - You choose investment funds based on your risk preference, but the value of these funds can fluctuate. You'll receive regular performance updates, usually annually.
How Does a Whole Life Insurance UAE Work?
Here is how whole life insurance in UAE works -
Lifetime Protection - This policy covers you for your entire life, up to age 99. In the event of your death, your beneficiaries receive a death benefit.
Premiums and Savings - You pay regular premiums, and part of these payments goes into a savings account known as cash value.This cash value grows over time and can be accessed later.
Rewards for Longevity - If you live past the policy term, you receive the sum assured along with any accumulated bonuses.
Financial Security for Loved Ones - The policy provides financial support to your family in case of your unexpected death, helping them live comfortably and pay off any debts.
Using the Cash Value - The accumulated cash value can be used for your financial goals, such as buying a home or funding your children’s education.
Add-ons for Whole Life Insurance Policy in Dubai
The following are the add-ons for the whole life insurance policy -
Waiver of Premium Rider - If you're diagnosed with a critical illness or become disabled due to an accident, this rider waives future premiums keeping your policy active.
Accidental Death Benefit Rider -This rider provides an extra payout to your beneficiaries, If you die in an accident.
Accidental Total Permanent Disability Rider - If an accident causes total permanent disability, this rider pays out a lump sum to cover medical expenses.
Critical Illness Rider - If you are diagnosed with a critical illness, this rider helps cover financial costs related to treatment.
Terminal Illness Benefit - If you're diagnosed with a terminal illness, this rider ensures that your beneficiaries receive the sum assured upon your death.
Whole Life Insurance Policy vs Term Life Insurance Plan
The following is the difference between a whole life insurance policy and term life insurance –
Basis
Term Life Insurance
Whole Life Insurance
Definition
Conventional life insurance plan that financially covers the policyholder’s family in case of the former’s death
More comprehensive plan that offers death benefits and maturity or survival benefits as a secondary feature
Payout
Death benefit given to the beneficiary if the policyholder passes away during the policy tenure
If you choose additional life insurance add-on like Return of Premium rider, it gets paid once the policy tenure ends
Includes both a death benefit or maturity benefit — you can select between a monthly payment option and a lump sum payout
Permanent Coverage
Specified policy tenure
Provided for up to 100 years of age
Premium
Usually low as there is no investment involved
Relatively higher due to inclusion of cash value components
Medical Examination
It is not an essential requirement
Mostly mandatory
Who Should Buy a Whole Life Insurance in the UAE?
Whole life insurance policy is a valuable option for everyone, it’s especially beneficial for salaried individuals. It’s highly recommended for:
Those who want to leave a lasting legacy for future generations.
Individuals seeking to build wealth and provide financial security for their families.
People with dependents who need long term financial support.
Those planning for a comfortable and financially secure retirement.
Individuals wanting to develop a disciplined savings habit.
Why Buy a Whole Life Insurance Policy on Policybazaar.ae?
Consider purchasing a whole life insurance plan in the UAE through Policybazaar.ae. This platform compares top plans from leading companies in Dubai and across the UAE.
Our plans are customisable to fit your financial goals, affordable, and designed to protect against inflation.
Here’s what you get with our whole life insurance plans:
Access to a life insurance calculator to help you choose the best plan based on your age, gender, lifestyle, and income.
24/7 customer support.
Personalised plan options.
Expert assistance for any questions or additional help.
Factors to Consider When Selecting a Whole Life Insurance Policy
When choosing a whole of life insurance in Dubai, keep the following factors in mind -
Understanding Your Needs - Before buying life insurance, figure out what you need from it. Treat it like any other investment and decide what benefits will best meet your goals.
Weighing the Risks - Assess your risk factors including your health, family history, and lifestyle. For instance, smoking or a family history of certain diseases will influence your policy choice.
Recognise Your Life Goals - Ensure your policy supports your family’s needs and goals, like education for children or securing a comfortable retirement. Consider how your policy will help achieve these goals even after you’re gone.
How Long Do You Want It? - Decide how long you need coverage based on your goals and financial situation. A policy that’s too short may require a new, potentially more expensive policy later, while a policy that’s too long might result in higher premiums.
Evaluate Your Options - Compare different policies to find the best fit for your needs and risks. Using an online insurance portal like Policybazaar.ae can assist you in exploring and choosing the most suitable options.
Frequently Asked Questions
Is it a good idea to invest in a whole life insurance policy?
It is a good idea to invest in a whole life insurance policy if you have dependents. It's an assurance that your loved ones are taken care of in case of your absence.
Can you use your whole life policy in Dubai to develop financial legacy?
Yes, you can use the whole life insurance policy to build a financial legacy as it can extend up to the age of 99 years.
What is the right age to buy a whole of life insurance in Dubai?
You should invest in a whole life insurance policy as early as possible.
What is the death benefit under whole life insurance in UAE?
The death benefit of this policy is a pre-determined amount or equivalent to sum assured. It is paid to the beneficiary upon the policyholder’s demise.
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