Bancassurance khaleej times | ADVERTISING SUPPLEMENT
Shield your loved ones from economic adversities L Insurance is among the best financial guardians to your loved ones and assets in your absence. Make sure you and your assets are adequately covered. ■■ Suneeti Ahuja-Kohli
ife has strange ways of surprising us, and it can easily derail all the hard work we do to nurture and protect our loved ones. Catastrophic events such as an accident, permanent disability, a sudden loss of earnings or even life, pose unforeseen risks to any plan. We have always been taught to look at the positive picture and hope for the best to happen, but it is also good to be prepared for the worst. This is the reason why we are big proponents of insurance. Be it life, health or general, an insurance policy is a financial guardian to your loved ones and assets, should something happen to you. Insurance made a huge difference to Mukherjees in 1993 when they lost the main breadwinner of their family in a road accident in Delhi, India. “I am the youngest of the three siblings. I was 13 when we lost our father. My elder sister was 15 and eldest one was 17, just out of school. It was a major set back for us, emotionally as well as financially. My mother was working, but dad was the main breadwinner, and as children we were distraught, too worried about my eldest sister’s university education, and our schooling. Thankfully my parents had a life insurance, which bailed us out of our tough days. My sister started her university education in time. In fact, all three of us completed our university education without a hitch, and today we are all well settled because of the forward thinking of our parents, who realised the importance of having an insurance and didn’t live hoping for the best,” says Charumitra Mukherjee, a soft-skill trainer at a consultancy firm in Dubai. An insurance policy is the best bet in case of an adversity. If you are without one,
trust your bank to help you get an adequate cover for you and your family. Banks in the UAE have exclusive tie-ups with insurance companies — for life as well as non-life (auto, property, health, etc.) — making it convenient for you to shop for all kinds of insurance under one roof. First Gulf Bank (FGB), for instance, has a host of products under its bancassurance channel that cover life, general and retirement options. The diverse set of
products are complemented with a board of financial planners who analyse the needs of customers and recommend who should buy insurance, for how long and how much. Union National Bank (UNB), for instance, gives its customers access to a host of policies under its bancassurance channel. These include: motor insurance, smart account, critical illness, LifeShield, EduCare, TriPlus and WomenCare.
Here’s a round up of the types of insurance that are a must for anyone with assets and dependants.
■■ Life Why is it important? Life is a fairly smooth ride when there is » Continued on next page
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Total premium collection for insurance industry (2011 - 2014)
a constant stream of income and all expenses are taken care of, but a blip or discontinuation in the same can call for trouble. While money can never fill in for the emotional loss, it certainly does assuage money-related anxieties and helps your dependants deal with the loss more confidently.
YEARS
Endowment: This is also a cash-value insurance contract that typically pays a lump sum amount on maturity or on death. Typically, maturity terms are 10, 15, 20 years up to a certain age limit. Market-linked: More popularly known as a unit-linked insurance plan, or ULIP, these policies give investors the benefits of both insurance and investment under a single integrated plan. Investors can choose between fund options and can also switch their investments. Traditionally, these are more transparent and costlier than other forms of cash-value insurance products. How much cover should you buy? Now this question is pretty subjective. The amount of insurance required really depends upon the monthly income you get, running expenses of the family and the financial commitments of the future, which includes funds for your children’s
2013
2012
2011
General Insurance
24.89
22.47
20.31
19.22
8.64
7.03
5.95
4.69
33.53
29.5
26.27
23.92
T O TA L
Figures in Dh billion
Pure term: This is a basic indemnity that provides cover for a specified term of years. If the insured dies during the time period specified in the policy and the policy is active, then a death benefit is paid to the nominees. Pure term insurance contracts do no have cash value, which means if the insured outlives the policy term, the policy expires and nothing is paid back to the insured. This makes it the cheapest form of life insurance available, and the most effective too.
Whole-life: This is the most basic cashvalue life insurance that covers the insured for his entire life. It is a way to accumulate wealth as regular premiums pay insurance costs and contribute to equity growth in a savings account where dividends or interest is allowed to build-up.
2014
Life Insurance
What are the types of insurance available?
Investment-linked insurance contracts: Besides term insurance, there are investment-linked insurance contracts that pay a return after the end of the policy term, or cover the insured for the rest of their lives.
policy. These can be evoked in case of need and relied upon for taking care of significant financial stress.
education, their health and well-being. Back-of-the-envelope calculations suggest a cover of about 20 times the annual salary. However, it would be best to discuss this with a personal finance advisor or a banker before buying.
■■ Health Why is it important? Medical costs are rising at a faster pace compared to the consumer priced inflation. In the need of the hour, medical bills
can create a serious dent into your savings or contingency funds, and leave you in a state of panic. This is why a health insurance policy is a must.
An insurance policy is the best bet in case of an adversity. If you are without one, trust your bank to help you get an adequate cover for you and your family. Banks in the UAE have exclusive tie-ups with insurance companies — for life as well as non-life (auto, property, health, etc.) — making it convenient for you to shop for all kinds of insurance under one roof.
What are the types of cover available? Basic health insurance: This means you buy a policy for a set sum assured and when required the cover pays for the medical expenses. However, there are clauses such as existing diseases, deductible and co-payments, which need to be kept in mind to avoid any disappointment.
Riders or special covers: Terminal illness and the likes of diseases with high severity can be emotionally and financially draining. Health insurers, therefore, have a special category called Critical Illness plans, or permanent or partial disability covers, that can be bought in addition to the main
Life insurance industry (2011-2014) YEARS
NEW LIFE BUSINESS
LIFE BUSINESS IN FORCE
T O TA L
2014
2013
2012
2011
2010
PAID PREMIUM
5.42
3.46
1.84
1.62
1.66
ANNUAL CHANGE (%)
56.3
88.1
13.5
-2.5
20.3
PREMIUM PAID
3.22
3.56
4.11
3.06
2.36
ANNUAL CHANGE (%)
-9.5
-13.4
34.1
29.7
25.4
PREMIUM PAID
8.64
7.03
5.95
4.69
4.03
ANNUAL CHANGE (%)
23.0
18.0
27.0
16.4
23.2
Premium collection figures in Dh billion
■■ Auto, Property & Travel Besides life and health, three other important yet underrated insurance policies include comprehensive auto insurance, travel and property insurance. Auto insurance: Since auto insurance is mandatory by law, almost all the vehicles have auto insurance, but limited to thirdparty liability. However, ideally what you should be buying is a comprehensive auto insurance policy for your vehicle. Simply put, a comprehensive coverage protects you against damages to your car that are the result of covered perils not related to a collision. Think of a scenario that could cause damage to your car that has nothing to do with striking another vehicle. In many cases, this can include theft. Also, in case of a collision, a comprehensive policy covers all the passengers and the driver. Property insurance: Blame it on the transient nature of population of the UAE or the lack of awareness, but most people living here do not have property insurance. Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. Travel insurance: There are a host of benefits of investing in this small insurance contract before you hop on a plane or plan your next road trip. A travel insurance covers the cost of medical emergencies in a foreign land (which is an invaluable benefit in Western and Europeean countries, keeping in mind high cost of medical procedures and consultancy), trip cancellations, lost baggage, and provides many other benefits that can take stress away and let you enjoy your vacation. Visit your bank to know more on how can you buy insurance and find out how adequately you are covered. —suneeti@khaleejtimes.com