I am a housewife living in India with my son. My husband worked for a trading company in Dubai for 22 years, earning Dh20,000, until June this year when he was made redundant because of a terminal cancer diagnosis. He passed away last week.
In 2016, he signed up for a four-year loan for Dh400,000 to pay for his mother’s medical bills. She was bedridden for two years following a stroke and needed nursing care 24 hours a day. The loan left him with monthly repayments of Dh10,000 and he paid Dh4,000 for insurance cover, which is valid until the end of next year. In 2017, after paying off Dh150,000, he topped up the loan to clear other credit card debts that were eating up his salary. The bank then asked him to pay for the insurance again; when he asked why he was told it was for internal purposes. It was supposed to cover job loss but the bank refused to give us a copy of the policy when we asked for it.
In April last year, my husband was diagnosed with colon cancer and started treatment in India. He was able to work from home and was paid, which meant he could keep up with the repayments. However, after six months of chemotherapy, he stopped responding to the treatment. In December, he was given six months’ notice, with his final salary payment coming through in June. His residence visa was also cancelled. He died last week after some time in palliative care in India.
The outstanding balance on the loan is Dh240,000. After we stopped paying this year, the bank said they would put his Dh123,000 gratuity payment on hold and file an absconders’ case against him. When he mentioned he paid for insurance twice, with both policies still active, the reply was that the policies were only applicable for the deceased. Again they turned down his request for a copy of the policy.
My questions are: what happens to the debt now that my husband has died? For the insurance, surely job loss due to terminal illness is covered? In addition, now that he has died, will the insurance cover the debt now? Do I have a right to see a copy of the insurance cover? Also, is there any scope for me to claim his gratuity as that’s the only money left for us?
I have not worked for seven years. Before that I worked for 10 years. My husband and I then invested all my earnings and gold to build our house in India. I don't have anything in my bank account as my husband was the breadwinner. Our son is a university student so as well as household expenses, I cover his student bills. My husband's sister is helping us financially, but I need advice on how to resolve the situation in the UAE. JL, India
Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank
Please accept my sincere condolences on the loss of your husband. During this difficult period, it important to be strong and determined in facing your personal and financial challenges.
It is helpful to know the exact coverage for both insurance policies as it could cover circumstances including unemployment, permanent disability or death. Inform the bank about the death of your spouse so they can guide you on the next steps.
The bank should not withhold or delay issuance of information and necessary documentation on their products and transactions.
Under UAE law, the individual who signed the loan application is the person accountable for all the debts incurred. Unless named as co-signer or guarantor of the loan, surviving family members will not be held responsible for the debt.
However, you should note that in case of death, bank accounts of the deceased will be frozen until an order is granted by the UAE court and all outstanding liabilities — including loan repayments, credit card debts, fines, utility bills and other payables — are settled. The process of reactivating bank accounts may be long and cumbersome. As such, you may want to speak to a legal representative to help you claim and gain access to his remaining assets, monies and benefits.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
First and foremost, it is important to clarify the law: a deceased borrower's debts cannot be passed over to the spouse. The only exception to this rule is if the spouse happens to be a co-applicant on the loan, has signed over a personal guarantee to the creditor or has issued a security cheque against the loan.
That being said, as per UAE law, the estate of a deceased borrower will be used to pay off the existing creditors before being passed on to the surviving spouse or legal heirs. In a case of debt default, where a bank can prove that payments were overdue, the lender would take priority in the distribution of the deceased's assets.
So where does that leave you? Your husband's gratuity and end-of-service benefits can legally be claimed by the bank to partially settle the debt owed to them by your husband. However, your husband signed up for job loss insurance along with the loan, with the scope and coverage of this insurance plan still a mystery. It isn't clear whether this insurance provided involuntary loss of employment (ILOE) benefits only or a more comprehensive loan shield (job loss, permanent disability, critical illness and death). While the former would only partially offset the loan dues and late payment penalties, the latter would most likely cover 100 per cent of the outstanding balance.
You need some proof and documentation of this insurance coverage to make a claim. The first step would be to contact the bank, inform them of your husband's death and get a copy of the insurance policy. If you have trouble getting the answers you want, file an official complaint with the bank, and subsequently with the Central Bank of the UAE, if the issue does not get resolved. Keep a record of all conversations with the bank, loan statements and payment receipts, especially for the amount paid towards the insurance coverage.
Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
If anyone has an insurance policy, they should be given full details at the time they sign the paperwork and then issued with a policy schedule. The bank is in the wrong here by failing to send over the policy details.
Whether the insurance plan covers the debt is dependent on the type of plan. I expect it to include death benefits at the least but many have a clause that if a person has a terminal illness, benefits can be paid out before death, although conditions apply. If this was a term assurance policy and premiums were missed for more than three months, cover may have lapsed so no payout would be due.
Many banks have some kind of payment protection cover but frankly, most are very limited in scope and are not obligatory. Only the bank can confirm if such a plan was taken out and provide details of the cover.
A third party, and that includes a wife who was not party to the loan or bank account, does not necessarily have a right to information under data protection rules but in the event of death a bank should assist you as a bereaved spouse and next of kin. They should also provide information to the executor of a will, if one is in place.
I understand the debt is in your late husband’s sole name, so under UAE law only the person whose name is on the debt is accountable. That applies whether it is a mortgage, a personal loan or a credit card.
It is standard practice for most banks to apply a gratuity payment to a debt, especially if no further payments are forthcoming but if there is a valid insurance policy that will repay the debts, the gratuity payment should then be available to beneficiaries. Under standard Sharia law provisions, and assuming there is not a valid UAE will in place, a wife may only be entitled to an eighth of his estate.
If the bank fails to provide proper information, a complaint should be made to the Central Bank, the regulatory body. I hope you get a good outcome.
The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to firstname.lastname@example.org