You meet a Financial Advisor in a coffee shop in DIFC or Marina. He is charming. He wears a nice suit. He
draws a graph on a napkin showing how you can become a millionaire in 20 years.
He says: “You need Life Insurance. But why just pay for death? Why not pay into a plan that grows your
money? It’s two-in-one!”
This is the sales pitch for the “Savings Plan” (Whole of Life / Unit Linked). And for 90% of
expats, asking one simple question before signing would save them years of regret.
The question is: “Do I want pure Protection (Term) or an Investment (Savings)?”
1. The “Two-in-One” Trap
The product being sold is often a “Long Term Savings Plan” with a tiny life insurance wrapper.
Why advisors love them
Commission. These plans pay massive upfront commissions to the broker—often 12 to 18 months of your
premiums.
Why expats hate them (later)
You commit to paying $500/month for 20 years.
If you lose your job in Year 3 and stop paying, the penalties are brutal. You might get back only 40% of
what you put in. The rest is eaten by “Early Surrender Charges.”
2. The Alternative: “Term Insurance”
This is what you probably actually need.
Pure Protection. No savings. No investment. No waffle.
- Cost: Tiny. A 35-year-old might pay AED 150/month for AED 2 Million coverage.
- Flexibility: If you stop paying, the cover stops. No penalties. No lost capital.
- Purpose: If you die, your family gets a check. If you live, you get nothing (except
peace of mind).
3. The “Repatriation” Clause
Expats forget this logistical nightmare. If you die in the UAE, your family wants to bury you back home (UK,
India, Philippines, etc.).
The Cost: Repatriating a body involves:
– Cargo flight ticket.
– Embalming.
– Zinc-lined coffin (mandatory for air travel).
– Clearance paperwork.
Total Bill: AED 20,000 to AED 40,000.
Does your policy pay this Immediately?
Most Life Insurance pays the “Death Benefit” (AED 1 Million) after 3-6 months of probate court.
That is too late. Your family needs the AED 40k tomorrow.
The Fix: Ensure your policy has a “Funeral Expenses” or “Immediate Cash
Benefit” that pays out small amounts (e.g., AED 50k) within 48 hours.
4. The “Passive War” Risk
We live in a volatile region.
Standard policies exclude “War and Terrorism.”
But there is a clause called “Passive War Cover.”
It means:
- If you join the fight -> Excluded.
- If you are an innocent bystander killed in a mall explosion -> Covered.
Many cheap policies exclude ALL war/terrorism. You need “Passive War” included.
Comparison: The 20-Year Test
Let’s look at Dave again. He has AED 1,000/month to spend.
| Strategy | Dave A (The Saver) | Dave B (The Protector) |
|---|---|---|
| Plan | Buys “Whole of Life” Savings Plan. | Buys Term Insurance (AED 150) + Invests the rest (AED 850) in ETFs. |
| Year 1-5 | Value = Negative (Fees). | Value = Growing + Full Cover. |
| Year 5 (Job Loss) | Dave stops paying. Plan lapses. Loses 50% of cash. | Dave cancels Insurance (Free). Keeps his ETF savings (Liquid). |
| Outcome | Locked In. | Free. |
The Rule: Buy Term (Insurance) and Invest the Difference. Keep them separate.
FAQ: Essential Questions
Q: What is “Critical Illness” cover?
A: It pays you while you are alive if you get Cancer, Heart Attack, or Stroke. It is statistically
more likely to be claimed than Death cover. Always add it to your Term plan.
Q: Is my company Life Insurance enough?
A: Usually not. It is often capped at “1 Year Salary” or “AED 100k.” That pays for your funeral and maybe 6
months of rent. It won’t send your kids to university. You need personal cover.
get back?” If the answer is “Zero” or “Very little,” walk away. Buy Term Insurance instead.