Shot of a grief-stricken man sitting on a sofa with his head in his hands (Getty Images) *** Local Caption ***  op02de-survey-depression.jpg
Failing to take out life or critical illness cover could leave your family in a desperate financial situation. Picture: Getty Images

UAE residents falling short on insurance to protect family members



About nine in UAE residents support a family member, however only a fraction have life insurance or adequate coverage for critical illness, says HSBC. 

According to the bank's The Power of Protection study, 89 per cent of UAE residents are supporting a child or parent fin­ancially, yet 79 per cent do not have insurance to pay them a regular sum if a serious illness or accident prevented them from working.  

"Even in the most robust market environment, uncertainty and unexpected conditions can affect any working person," said Gifford Nakajima, regional head of wealth development, retail banking and wealth Management at HSBC, Mena. "Especially when family members, living both near and far, are depending on support from people working in the UAE, fin­ancial planning should be a family priority."

Only a fifth of those with dependents have a will in place while 23 per cent retain a leg­ally appointed guardian. The UAE ranks the second highest globally for people financing a family member. No other Middle East countries were surveyed by the bank.

The HSBC report attributed the lack of forward planning to a heightened sense of economic optimism, which far outweighed the global response. While nearly 80 per cent of UAE respondents say they are managing well or very well, globally the figure is 67 per cent. 

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Read more:

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Steven Downey, a chartered financial analyst candidate at Holborn Assets in Dubai, said the risk of not having adequate cover in place "can be quite catastrophic".

"Best case scenario, you use up a large chunk of your savings paying for a critical illness and transitioning about a spouse's death," he added.

"Worst case scenario, you are financially wiped out and in the case of death where a spouse stopped working, they will have to move in with family and reenter the work force under great financial strain."

Zurich, Switzerland's biggest insurer, which has operations in the Middle East, recommends a young family to sign up for about 20 times their annual salary for life cover and eight times their salary for a critical illness. It said its average life cover claimant is 51 at the time of death, and the average critical illness claimant is 47.

Chris Bag­nall, chief underwriting officer and head of claims for Zurich International Life highlighted the UAE's low adoption of life coverage to The National late last year by comparing global penetration rates – a measure of the total amount of money spent on insurance premiums against GDP.

In the UK, life coverage is about 11 per cent while in the US it is 13 per cent, according to Zurich. When compared to the UAE, just over 1 per cent of GDP is spent on life insurance.

Mr Nakajima said the low UAE rate is caused by a "significant lack of awareness around cost of life insurance", with some annual premiums costing about as much as the ­average annual car insurance. However, he said residents must also factor in the cost of delay.

"When you are young, fit and healthier, the premiums are usually lower, but as you get older and your medical history changes, costs are likely to be higher," he said.

"For example, a healthy 30-year old male can get basic term life insurance for as little as US$50 a month. Critical illness would be an additional $75 a month, so the total annual cost for both is about $1,500 – which is what motor insurance would cost for a nice car."HSBC said only about 20 per cent of UAE residents have life or disability cover that would pay out in the event of death or illness. That compares with more than 30 per cent of people globally.

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July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

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