FPI’s fourth annual protection survey results show that brand reputation and price have the greatest influence on people’s decision to buy life and critical illness insurance in the UAE. These factors were considered more important than others, such as adviser recommendation, claim payment history and portability; which enables continuity of insurance coverage when relocating to another country.
The survey, conducted in collaboration with market research and data analytics firm YouGov, polled more than 1,000 respondents. 40% of respondents said brand reputation of the insurer was the most important factor behind their decision to purchase life insurance, while another 30% cited affordability as their key consideration. Only 7% of respondents said that adviser recommendation was the most important factor in choosing insurance.
The survey also showed that just under half (49%) of respondents have life cover and overall just 24% have cover against serious illness. Of the male respondents 28% claimed to have critical illness insurance (up from 25% in 2017) and only 19% of females (down from 24% last year) said they had this cover.
Of the 51% of respondents who said they did not have life cover, 36% said it was too expensive while 30% of respondents without cover were not familiar with the concept of life insurance. Another 39% said they were not familiar with critical illness insurance.
Chris Divito, Managing Director, Middle East and Africa at FPI said: “Understanding the need for life and critical illness insurance, and selecting the right policy is crucial. I urge people to speak with a financial adviser, who will be able to help them to determine whether they need cover and the amount of cover they need. As the survey shows, there is a worrying lack of understanding around life and critical illness insurance and therefore people are likely to base their decisions on factors such as brand reputation of the insurer and price. While it is important to consider these aspects, a financial adviser is best placed to review a range of plans from different providers, and to help people choose a plan that is appropriate for their individual circumstances; and not just based on price and brand.”
Term insurance plans provide a payout in the event of death or serious illness of the policy holder before the plan's expiry date.
Such plans can provide a much-needed lifeline for a family if a breadwinner should die or become seriously ill and can be used as protection for a mortgage or loan, or to protect a business in the event an important employee passes away or becomes seriously ill.
Chris Divito commented: “The importance of life and critical illness insurance cannot be over-stated – especially if people have family or loved ones who rely on them financially. In addition to providing your family with funds to cover everyday expenses, insurance can cover outstanding debts like a mortgage or credit cards that would need to be paid off if you become seriously ill or if you die.
As the survey suggests, the common misconception is that life insurance is expensive, which is probably why so many people in the UAE delay taking out a policy. What people don’t realise is that there are various options that work for every budget and financial situation. Financial advisers can work with you to determine how much cover your family would need to replace your lost income. For example, a 34-year-old, non-smoking male living in the UAE could secure life cover of USD250,000 for a plan term of 20 years, for a premium of just USD30.53 per month, on standard terms.
A protection policy will ensure your children can continue their education and your family can lead the life you would have provided, even if you are not around to enjoy it with them.”