5 Mistakes to Avoid Before Buying
With changing times, the penetration of life insurance amongst the residents of the UAE has increased manifold. More and more people, both citizens and expats, have begun to understand the need for protecting their lives against various forms of debilitating vulnerabilities. As a result, the value of the life insurance market in the UAE has breached the mark of $2.4 billion!
However, buying life insurance is not always an easy job. Not only do you have to purchase a policy that will satisfy your specific insurance requirements, but you are also required to ensure that the premium, tenure, and coverage, fall within the purview of your finances. So, if you are planning to buy a good life insurance policy, here is a set of 5 major mistakes that you must aim to avoid.
1. NOT READING TERMS & CONDITIONS
While purchasing a life insurance policy, make sure that you read its terms and conditions (T&C) appropriately. The T&C section usually contains intricate details that have the potential of influencing the scope and limitations of your policy.
When checking the T&C part, look specifically for:
- Exclusion clauses
- Charges, fees, and other costs
- Policyholder rights & responsibilities
- Procedure to apply for a claim
- Conditions when claims can be denied
- Implications in case of death/disability
2. NOT FOCUSING ON COVERAGE
One of the most significant parts of a life insurance policy is the total amount of cover that it provides. A comprehensive understanding of coverage helps determine the type of plan that you need to buy in order to meet your critical financial goals.
Therefore, if you want to avoid being under-insured or over-insured, focus on getting an insurance cover based on:
- Number of dependents
- Short-term/Long-term goals
- Future inflation
3. INCURRING EXCESSIVE EXPENDITURE
A life insurance policy should constitute a small but crucial portion of your overall financial portfolio. Ideally, it shouldn’t incur an expenditure of more than 5% of your total disposable income. This is because spending anything more than this amount will end up leaving you with very little money to save or invest. Consequently, your regular budget will suffer.
A policy should be bought to complement wealth creation, not pose a needless hindrance.
4. MISREPRESENTING FACTS
While filling out your insurance application form, ascertain that you have not hidden or distorted any facts. In the Emirates, such misrepresentation is taken very seriously and is immediately classified as ‘fraudulent.’ Furthermore, under these circumstances, your claims are denied.
Ergo, make sure that you have disclosed facts like:
- Present health condition
- Previous medical history
- Family health status
- Current lifestyle
- Smoking habits
5. NOT PURCHASING ILLNESS COVER
A life insurance policy should not just be purchased to offer financial aid in case of death. Instead, it should be bought with an illness/critical illness rider to ensure that any life-threatening disease like cancer, diabetes, or paralysis, is also taken care of. Doing so would help you avail massive financial relief whenever you or your family members are diagnosed with a critical disease.
By avoiding the aforementioned mistakes, it would become extremely easy for you to purchase a decent life insurance policy in the UAE. After all, insurance is not just a medium to protect your life, but it is also a way to safeguard the future of your loved ones!
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