No one wants to spend more on life assurance than necessary – after all the one paying for it will never see the benefit. The product should fit the purpose and that’s why I am pleased to announce the launch of a new life assurance product from one of the best international life assurance companies licensed here in UAE.
Generically, there are two forms of life assurance: whole of life, which has an investment element and may be cashed in in the future and term assurance which is has no value unless you die. Whole of life costs more on a monthly basis whilst term assurance is cheaper and generally used for the repayment of loans, such as those used to buy property, on death or serious illness of the person paying the loan.
In developed markets there are many types of term assurance, the two most common are level term assurance (LTA) and decreasing term assurance (DTA.) Whilst DTA has been available in UAE in the past, it has been several years since it has been available. So advisers could only recommend LTA contracts as this was all that was available when ideally they would have recommended DTA. But it is better to have too much life assurance than too little.
Why is this important? Well, DTA is generally recommended for loans where the balance falls over time (reducing balance or repayment loans), this is the case with all mortgages in UAE. Under a DTA contract the level of cover falls in step with the loan balance. Because the level of cover falls over time DTA is significantly cheaper than LTA, where the level of cover remains constant. So there is the potential for holders of LTA life assurance to save money if they switch to the new DTA contract.
Anyone interested in this new contract should contact their financial adviser to obtain a quote. If you don’t have an adviser you are more than welcome to contact me and would be happy to help. However it is ESSENTIAL that you keep your existing life assurance until you have paid the first premium on your new policy to avoid a period when you are not covered or if the life assurance company refuses cover due to underwriting.
Please let me know if you have any questions or comments, your feedback is always welcome.