Types of Term Insurance in UAE

Whether you want stable coverage, protection against inflation, or even a refund of your premiums, there’s a plan for you. Choosing the right types of term insurance can help you safeguard your family, repay debts, and secure long-term financial goals.

What Is Term Insurance and Why Does It Matter?

Term insurance is a type of life insurance that provides financial coverage for a fixed period (say 10, 20, or 30 years). If the policyholder passes away during the tenure, the insurer pays a lump sum amount, known as the sum assured, to their family.

Unlike other life insurance policies, term insurance doesn’t include savings or investment features. It’s purely protection-focused, making it affordable and efficient.

Why Is It Important?

• It replaces your income for your family if something happens to you.
• It helps your loved ones pay for home loans, education, and daily expenses.
• It ensures your family continues their lifestyle without financial stress.

If you’re an NRI, getting the best type of term plan in UAE ensures that your family back home in India is financially secure even if you live or work abroad

Different Types of Term Insurance Policies in UAE

There are several types of term life insurance policies, each designed to fit specific financial goals. Let’s understand them one by one —

1. Level Term Insurance

Level term insurance is the most common type of life insurance in the UAE. In this plan, the money your family gets stays the same throughout the policy. No matter when something happens during the policy period, they will receive the same fixed amount.

2. Increasing Term Insurance

In this plan, the money your family gets grows over time, usually by a fixed percentage each year. It helps your family keep up with rising costs as time goes on.

This is particularly helpful in the UAE, where living costs and inflation can significantly affect financial needs over time. Premiums may be slightly higher than level term plans, but are justified by the increasing coverage.

Example: A parent in Abu Dhabi can choose an increasing term plan that grows 5% annually to match the expected rise in educational expenses over the next 15 years.

3. Decreasing Term Insurance

Decreasing term insurance is designed for individuals with financial obligations like mortgages, car loans, or other debts. Here, the sum assured decreases over the policy term in line with declining liabilities, while premiums usually stay the same. Lower cost compared to other plans as coverage decreases over time.

Example: A homeowner with a 20-year mortgage in Dubai can choose a decreasing term plan so the insurance payout reduces as the loan balance decreases.

4. Convertible Term Insurance

Convertible term insurance offers flexibility by allowing policyholders to convert their term plan into a permanent life insurance plan (like whole life or endowment) without a new medical exam.

Quick Comparison of Types of Term Insurance

Best Term Insurance for NRI 2025

Here are some top term insurance plans available in the UAE from reputed insurers that cater to both residents and NRIs —

💡 Tip: Always compare premiums, benefits, and claim ratios before choosing your plan. You can use Policybazaarinsurance.ae to compare and buy the best term insurance in UAE within minutes.

Who Should Buy a Term Insurance Plan in the UAE?

Term insurance is suitable for a variety of individuals. Here’s a breakdown —

1. Young Professionals

Low premium rates at a younger age make term insurance affordable. This offers early financial protection and helps build a security net for the family in the future.

2. Married Couples

Ensures your spouse and children are financially secure if something unexpected happens and helps cover living expenses, mortgage payments, and future family goals.

3. Parents

Term insurance helps make sure that if parents are not around, their children can still go to school, see a doctor when needed, and have enough money for everyday life.

4. Self-Employed Individuals

For people who earn money in different amounts every month, term insurance makes sure bills, loans, and family expenses are paid even if something happens to them.

5. Non-Residents (NRIs)

NRIs living in the UAE can purchase term insurance in India or from UAE-based insurers to protect loved ones. Get financial security and potential tax benefits, strengthening long-term financial planning.

How to Purchase Term Insurance Online in the UAE?

Buying a term plan online in the UAE is straightforward with Policybazaarinsurance.ae. Here’s the process —

1. Navigate to the “Term Insurance Plans” section
2. Use the online term insurance calculator to check premiums and coverage
3. Fill out the online application form at the top with personal and financial details
4. Compare different plans, their features, and riders
5. Submit the form; our expert agent will contact you for verification
6. Make a payment online to activate the policy

How Much Term Insurance Coverage Do You Need?

The Human Life Value (HLV) method helps calculate the right coverage. This considers your age, income, expenses, and future financial goals.

Rule of Thumb:

Example: A 32-year-old with an annual income of AED 200,000 would ideally need AED 5,000,000 coverage (25 x 200,000).

Factors to Consider While Buying Term Insurance in the UAE

Choosing the right plan requires careful consideration of your lifestyle, financial obligations, and long-term goals. Here’s a detailed guide for residents and expats in the UAE —

1. Think About Dependents and Life Stage

Your financial responsibilities change as your life changes. A young single person may need less coverage, but if you are the main provider for your family, you will need a higher amount of insurance to keep them financially secure.

Selecting the right coverage amount and policy term based on these factors is crucial to ensure your family can maintain their lifestyle even in your absence.

2. Evaluate Your Current Lifestyle

Living expenses in the UAE can be steep, particularly in Dubai and Abu Dhabi. By objectively assessing your lifestyle, you can select a plan that helps your family live safely, just as they used to, even after you're no longer around.

3. Examine Your Income

The ideal sum assured relies heavily on your income. Calculate your current income and think about future earnings to determine a sum assured that can support your family for several years.

Tips for UAE Residents

• Include all sources of income, including allowances like housing, transport, and education benefits.
• Consider future inflation and rising education or healthcare costs when deciding the coverage amount.
• You can estimate a sufficient sum assured with the help of a financial advisor or an online insurance calculator.

4. Add Riders to Your Plan

Riders are voluntary additions that increase the minimum coverage of a term plan. With an additional small premium, you can add coverage for extra risks.

Common Riders in the UAE Market:

• Accidental Death Benefit: Provides an extra payout in case of accidental death.
• Critical Illness Rider: Covers life-threatening illnesses such as cancer or heart disease.
• Waiver of Premium: Waives future premiums in case of disability or critical illness, ensuring your policy stays active.

Choosing the right combination of riders maximises your family’s financial protection under the term insurance plan.

5. Check the Claim Settlement Ratio (CSR)

The claim settlement ratio indicates the insurer’s reliability in paying claims. A higher CSR suggests a greater likelihood of claims being settled efficiently. It’s better to opt for insurers with a consistently high CSR in the UAE to ensure peace of mind for your family.

While CSR is important, also check customer reviews, company reputation, and claim processing time.

Conclusion

Term insurance guarantees your family's future to be safe, even if life takes a different turn. With knowledge of the types of term insurance, you can choose a plan which suits your financial needs, whether it's level term, rising term, or the best term insurance for NRI if you are abroad.

Frequently Asked Questions