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Why Life Insurance?

Christian Cuss is an associate Vice President with the Continental Group who specializes in Life Insurance and savings plans

“Is it dead money?"

The real answer is no, as it has so many features that can help not just you, but your family as well.

I speak to expats everyday who say one of two things “I don’t need it” - Let me ask you a question…. How much does your partner and children depend on the fact you work and earn a living? Would you want to still be providing for them if you’re unable to work or even in your death? People with families always do.

“I have it in my home country” - This is great as you clearly see its importance! As it is so important, IF it doesn’t cover you whilst resident in another country its dead money, yes? Because most insurers only cover you for period of time out the country of cover origin, for example 6 months.

With spending my working life helping to protect families when they need it the most, with a loss of a loved one. I found it imperative to match the family’s desires and needs to a product.

I have found in the UAE law dictates a lot towards ‘your’ right plan. There has been a large increase in the update of life insurance over the years due to these reasons.

  • People starting families
  • People changing covers from home countries
  • People seeing first-hand the problems that occur when you really need the cover

As far as types, I’ve seen that the options available to people are plentiful.

Term Insurance

As the name implies, you buy term insurance for a specific period of time, usually between 1-30 years. If you die within that timeframe, your beneficiary will receive a pre-set amount of money – the death benefit. If you fail to pay your premiums, cancel the policy, or die after the term ends, neither you nor the beneficiary receive anything.

The major advantage of a term life insurance policy is that if you are young, you generally pay extremely low premiums for a substantial death benefit. However, as you get older, your premiums will increase when you renew or purchase a new policy.

If you have life insurance through your employer, it is probably a term policy. The death benefit for employer-provided life insurance policies is often equal to one year's salary. Having insurance through work does not mean that it is not beneficial to purchase a policy on your own. Additionally, you may lose the policy when you leave your job.

Cash-value Insurance

With a cash-value life insurance policy, part of your premium pays for the life insurance (which, like with term insurance, pays a death benefit if you die), and part of it goes into a savings plan. The insurance is permanent – you can keep it as long as you make the payments. If you decide to cancel the plan early, you get back what is in the savings plan.

There are three basic types of cash-value life insurance:

Whole Life Insurance

Whole life insurance is the standard cash-value policy. The premiums are fixed for the duration of the policy, and the life insurance company chooses where to invest the funds in your savings plan.

Universal Life Insurance

Universal life insurance offers payment flexibility. You choose what premium to pay and can increase or decrease your payments anytime. You can also change the death benefit amount. The payment is broken down into three components: the mortality charge for the death benefit, administrative costs, and the savings plan. If your payment is lower than the mortality charge and administrative costs, the shortage is subtracted from your savings plan. If there is not enough in the savings plan to cover it, your policy lapses.

Variable Life Insurance

The main feature of a variable policy is that you, not the insurance company, choose where to invest the funds in your savings plan. There are two basic forms of variable life insurance – one with fixed premiums, called straight variable life, and the other with flexible premiums, called variable universal life. In either form, this type of policy is risky. If your investments perform well, the cash value portion of your savings does well. If they fail, your savings suffer.

For myself being thirty one and single. I have opted for a life insurance with savings built in. Whilst I’m younger I get larger amounts for my money. If I have a family in the future I know I have protected them. If I don’t I am still saving for the future; and that’s what’s important.

Christian Cuss
Associate Vice President
Continental Group International
Linkedin: http://ae.linkedin.com/pub/christian-cuss-cemap/21/284/147

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