Why ‘One-Size-Fits-All’ Doesn’t Work in the UAE.
Life insurance isn’t just about securing a payout – it’s about ensuring that your loved ones can maintain their quality of life if you are no longer there to provide for them. In the UAE, the right coverage amount can vary greatly depending on lifestyle, family size, financial obligations, and whether you plan to remain in the country long term or eventually relocate.
While some advisers suggest an arbitrary multiple of your annual salary, this approach rarely captures the full picture. A family in Dubai with school-age children and a mortgage will have very different needs from a single professional in Abu Dhabi. Because of this, conducting a comprehensive assessment of your needs – factoring in income, debts, dependants, and future expenses – will be one of the most important financial decisions you can make in the UAE.
Step One: Cover Your Immediate Financial Commitments.
The first and most obvious step is to account for all existing debts. This may include a mortgage, car loan, or personal finance agreements. In the UAE, mortgage life insurance is sometimes included in home loan packages, but the level of protection can be minimal and may not fully settle the loan. Ensuring your policy covers these obligations means your family won’t face repayment demands at the worst possible time.
Step Two: Consider Ongoing Living Expenses.
In the absence of social security benefits for expats in the UAE, your life insurance payout may be the only financial lifeline for your family. Consider monthly household expenses such as rent or mortgage payments, utilities, groceries, transport, and medical insurance premiums. Multiply this figure by the number of years you wish to provide support, which is often until your children reach financial independence, and you’ll arrive at a suitable figure for your living expenses. An expert insurance broker can help with this and make sure you have an accurate assessment, including any and all expenses you might have missed.
Step Three: Account for Future Goals.
Many families in the UAE have future-focused financial goals, such as university tuition or starting a business back home. These should be factored into your coverage amount. Education costs, in particular, are significant in the UAE, with annual school fees easily reaching into tens of thousands of dirhams. This again highlights the importance of having adequate life insurance cover: life is expensive in the UAE and it’s important that your dependants are able to have a continuity of lifestyle in case the worst should happen.
Step Four: Build in a Safety Margin.
Inflation, exchange rate fluctuations, and unforeseen emergencies can all erode the value of a payout over time. Including a safety margin of 10-20% above your calculated needs can help protect against these variables. IAE Insure can help you to figure out how much of a safety margin you might need as this will depend on your specific circumstances and future ambitions.
Bringing It All Together.
A practical formula for UAE residents might look like this:
Outstanding debts + (Annual living expenses × Years of support) + Future goals + Safety margin.
While this approach can give you a working estimate, a professional adviser can fine-tune it, considering your specific circumstances and the cost of living in your emirate. This experience and knowledge is invaluable in making one of the most consequential financial decisions of your life. If you need advice on the size of your life insurance policy, contact IAE Insure today to get the exact cover you need.
