By Savitha Shetty, Vice President
“Why do I need Critical Illness cover? I have Medical Insurance” This is the typical reaction I get when I ask friends if they have a critical illness cover?
Let’s start with the very basic- What is a critical illness cover? This is a cover which pays out a lumpsum (sum assured) when one is diagnosed with a major listed illness. Most of the insurance companies’ critical illness list typically include about 32 illnesses like cancer, stroke, first heart attack, motor neuron disease and more.
Let us look at two real life examples which illustrate how this lumpsum payout could have significantly helped these individuals.
Story 1: Mrs. Sultan, an Arab national, was recently diagnosed with breast cancer in 2018. She has an above average enhanced medical insurance policy which was sufficient to met her regular medical insurance needs. However, when she got diagnosed with breast cancer the doctor prescribed many tests which aren’t typically covered by most insurance policies. The cost of treatment has now surpassed the available limits on her medical policy. Mrs. Sultan and her family are now digging into their savings to pay for these medical tests. Not only that Mrs. Sultan has young school going kids. Though she received some support from her family, she has had to hire some additional help at home to help take care of kids and manage the household while she is undergoing treatment. The financial stress in addition to the emotional stress of the illness has taken a significant toll on the couple.
A critical illness policy would have saved a lot of the agony, at least the financial ones, for the Sultans.
Story 2: Mr. Majumdar, aged 35 years,was working as one of the Directors at a large financial firm in DIFC. Due to economic stresses the company decided to shut operations in 2010. All employees were made redundant. Back in 2007,I had asked Mr. Majumdar to consider having a critical illness policy but after a lot of back and forth, he concluded that his medical insurance provided him sufficient cover and that he didn’t see the need to buy a critical illness policy.
As destiny would have it Mr. Majumdar was diagnosed with stomach cancer soon after he was made redundant. The timing
couldn’t be worse. He had NO MEDICAL INSURANCE to start with;two young kids with one ready to start schooling and; a household living expenses that won’t take a break.
Buying a new medical insurance was not an option as medical insurance gets more expensive when a severe medical condition is already diagnosed. Mr. Majumdar had to depend on social service organizations to fund his cancer treatment and all his savings were exhausted to ensure that his family is comfortable.
Had he CHOSEN TO BUY A CRITICAL ILLNESS policy, the scenario would have been different. He would have been paid a lumpsum (for eg. USD 250,000) as soon as he was diagnosed with cancer. He would have paid for his treatment without having the stress of where money for his treatment would come from. Instead of losing sleep over what has happened, he could have recovered faster, with his savings still intact.
Hope the above real-life stories help answer the question of “Why do I need critical illness cover when I have medical insurance?”
*We have disguised the names of the actual persons to protect their privacy
** Premiums will vary depending on every individual’s unique circumstance
Raising a child is one of the most beautiful experiences of anyone’s life, but that doesn’t mean it comes without any challenges. One of the major worries that plagues the minds of parents is their child’s education.
We can see this trend in the UAE, as an average family pays close to 365,000 AED for its child’s education from kindergarten to the first four years of college. The survey was done by HSBC,and shockingly, this number is more than double than that of the global average.
Studies also show that education costs are on a constant rise at a rate of 7% a year. This is primarily due to the high inflation rates in the education sector. So, by the time a one year child enters college, cost of education would have increased by over three times the current cost!
The above HSBC study also showed that 84% of the parents believe that their kids will have a bright future. However, in order to secure that bright future, it is more important now than ever, that parents and parents-to-be start saving early for education, as the impact of compounding interest cannot be under-estimated.
Let us walk through on how best you can protect your dreams and ambitions for your little ones :
Step 1: Decide where you want to send your little tot for education
It is hard enough to figure out which school and activities to send your child to so figuring out where your tiny tot will go for college,10 – 18 years from now requires a bit of foresight. However, the alternative, that is the cost of not planning, is immense. As this study by Friends Provident International shows, the variation in the cost of education between let’s say India and US is over 10 times!
One has to start thinking about whether one wants to send his/her children to their home country or abroad fairly early on to make sufficient provisions for the same.
Step 2: Consider inflation
Now that you have decided (well, sort of decided) where your children will go for their further education, one has to look at specific education inflation rates in each country to assess how fast these costs are growing. For example, in the US historically cost of education doubles almost every 10 years.
Step 3: Start saving!
Armed with the savings goal, there are various tools available in the market to safeguard your child’s education.
- One can put aside certain amounts from salaries on a regular basis in diversified assets such as stocks and bonds. Discpline is the key as there is always temptation to withdraw the monies and use the funds for other short to medium term needs;
- There are various savings plan offered by insurance companies such as Zurich International Life, , Friends Provident Interntionaletc which allow for investments in diversified portfolios in a systematic manner. The maturity amount of these plans are typically excluded from taxation, giving you tax benefits in the long run.
- Various governments have schemes to help their citizens save for education (example 529 plans for US citizens). These schemes typically offer tax benefits.
When making a decision of which set of options to choose, carefully evaluate the cost of investment, your risk appetite and whether the returns compensate you for the risk you are taking.
Step 4: Protect your savings!
Life is uncertain, that goes without saying. All the planning and savings takes a parent only so far. When it comes to a child’s education, one should hope for the best but plan for the worst.
For as long as you are alive, you will diligently save for your child. However if you were to fall critically ill or die, without a safety net protecting your income, your child’s future will be in jeopardy. It is always advisable to protect your income(s) via a term life or a whole of life insurance plan.
Opting for an education savings plan will help your child in his/her education but it is not sufficient. lt lacks the complete coverage that can only be offered by combining the savings plan with an insurance coverage. Hence, we recommend the purchase of a term life insurance plan in addition to a child education plan to offer your child the complete financial protection they deserve.
Choose wisely as different insurance companies offer different options to the consumer. Take the time to review plans and discuss their pros and cons. We are happy to sit down with you and share our experience and knowledge and guide you on your journey to safeguard your child’s future.
Please leave us a message at New Age Insurance Brokers and we will be more than happy to help.
Workmen’s compensation and group life insurance policies are essentially rewarded packages that are beneficial for both the employees and employers as it helps employees to replace income at minimal cost to employers at the time of need. We will describe the benefits of both workmen’s compensation and group life insurance and highlight the differences so you are able to assess what reward package makes the most sense for your company.
What is Workmen’s Compensation Insurance?
Workmen’s Compensation Insurance also known as Employer’s Liability insurance is a liability policy to compensate employees for bodily injury or death due to accidents or occupational disease arising out of and during the course of employment.
In the UAE, the Federal Law has mandated employers to provide employees with medical, disability and death benefits for any accident, injury or death caused at or by the workplace. Without adequate cover, your company may be liable for large payouts encompassing medical, loss of earnings and related costs.
At the time of a claim, the payout of the policy depends on the medical bills and other claim documents submitted to the insurance company subject to the agreed terms and conditions stipulated in the policy.
What is Group Life Insurance?
Group life insurance policy is a life insurance product to cover a group of people under a single contract. Just like workmen’s compensation policy, in a group insurance contract, the policy owner is the employer or an organization, and the policy covers employees or members of that particular organization.
A group life Insurance differs from workmen’s compensation as it provides a lump sum payment, as opposed to payments based on claims with specific limits, in the event of an employee’s death or permanent disability due to accident or sickness.
While not mandated by law in the UAE, group life insurance is one of the best ways in which an employer can instill a sense of security in the minds of the employees. Most employers often pay for the basic group life insurance themselves without burdening the employees. If the employees want additional benefits like critical illness coverage, then they may pay extra for the supplemental benefit.
Another advantage of group life insurance is that it is not territorial like workmen’s compensation insurance. Employees are eligible for the coverage worldwide, including their home country. In addition, the group life covers employees 24 hours a day, 7 days a week, 365 days per week. In short, employees are covered whether they are on duty or off duty, unlike basic workmen’s compensation policies which cover employees only during working hours.
In UAE, the employer can opt for a group insurance policy provided there is a minimum of 11 members working for the company.
So what should you choose for your employees?
Workmen’s compensation in case of a work-related accident is mandatory in UAE and an insurance cover is the most cost-effective means for an employer to meet this potential liability.
However, for a low cost, your company can opt for group life insurance that enables comprehensive coverage for your employees thus strengthening your image as a caring employer which in turn helps with employee retention. There are some group life covers that can also help you meet your workmen’s compensation obligations as required by the Federal Law.
Still unsure on which insurance coverage to choose for your business? Our expert panel is here to help you sort things out. Get in touch with us or leave an email, we will get back to you promptly.
From fresh organic breakfasts to fat-free lunches, the millennial’s are moving towards a healthier lifestyle. In addition to the precautionary measures taken by the general population, advancement in science and technology in the field of healthcare has led to an increase in the life expectancy. As per WHO, “Today, for the first time in history, most people can expect to live into their 60s and beyond”. However, good physical health cannot be considered the only determinant for making long life a blessing.
In our golden years, incomes are uncertain, but expenses are certain. We are more susceptible to ailments like Arthritis, Heart diseases or Osteoporosis, and hence being able to pay for the same ensures that the golden years are indeed golden. With Governments scraping off or decreasing the pension funds, retirement planning is no longer optional but necessary.
Retirement Planning Helps You to Be Prepared
While we are advancing in health care, artificial intelligence is not far in the race. With a single machine replacing a chunk of manual labor, the possibility of us turning to the chapter of retirement a little earlier than expected is high. Interestingly, most people do not invest sufficiently for retirement with a hope that governments or children will pay for the same. However, planning should be done keeping the worst-case scenario in mind while hoping for the best.
While imagining retirement, most of us dream of sitting in a comfortable lawn chair with a beautiful view, whilst sipping tea with our loved ones. And to aid this dream, we save a portion of our income in a savings account and hope to live off of it in the years to come. However, with the ever-increasing standards of living and inflation rates, these savings might not last as long as one had hoped. Growing old in a lonely setting accompanied by poor health is not attractive.
Tips and Tricks for Retirement Planning
Start saving early: Planning for retirement is mostly about a good start. The best-case scenario is early planning and saving because the earlier you invest, the better you will be down the line. So start now. Not tomorrow or on your next birthday but now. The retirement phase may seem distant but saving for it now saves you from the bumpy ride.
Every penny counts: Take out a proportion of your monthly profit or salary separately to be saved for your retirement. This amount can end up in significant numbers once you reach your golden years.
Health is wealth: Health is wealth and one should never take it for granted. Maintain good health and take care of your physical and mental fitness. Improved health will save you some hefty medical bills in future and allow you to enjoy your retirement years.
Expert help matters: While you are still earning, consult a financial advisor for an easy financial audit to ensure that you are ready for the expenses for crucial and mandatory events ahead in life. This may include planning about heavy expenses for marriage or child education.
So, living longer is a blessing, provided you have planned your life accordingly. Invest in retirement planning while you are young and enjoy old age with a peace of mind!
In every business, there is always the most productive employee that pilots the business affairs, the person whose exit will shake the business to its core foundation……. That person is the business’ KEYMAN.
Most people are familiar with life insurance policy and how it compensates the insured family in the case of demise. However, not so much is known about the Key man insurance policy that keeps business running in event of loss of the business propeller, the key employee.
Keyman insurance helps a business recover from the loss of her front man. Individual talents in businesses varies and so does their input and output which when converted to relevance, makes certain persons the rear head of the firm after the business owner. Every business has a number of people who contribute significantly to the running and growth of the company. Its only sensible to insure against untimely demise of such individuals to keep the business from total shut down when such key employee is no more.
Keyman Insurance is an insurance policy where the premium payer is the employer, the life to be insured is that of the employer’s most valuable employee (keyman) and the benefit, in the case of claims, goes to the employer to use in keeping the business running and operational in event of the demise of the insured employee.
There are numerous benefits of insuring a company’s keyman and as far as the list goes, no single reason is less beneficial in the insurance chain. The advantages can not be emphasized and the absence of it can have fatal consequences.
- Keyman insurance protects businesses against financial shutdown in event of unfortunate death of the key person.
- The directors can also safeguard their immediate family from getting affected by the various business cycles the business has to encounter.
- Such heightened sense of importance will boost the morale of the insured employee which will readily convert to higher productivity and helps secure his stay in the company.
- It helps in keeping the price of the company’s shares stable in case of death of the keyman. If investors are assured that any financial loss from change of management as a result of the death of their usual go-to person, they wont have to start discharging their shares immediately after the death of such person.
- It places a high value to a keyman insured company. In the case of a business that is being put up for sale, prospective buyers are more likely to put a higher value to the company if they know that it has a monetary back up to meet the replacement of its key employee.
When a company purchases a life insurance policy on the key employee, pays the premiums and have the benefitting rights to that policy, when the insured key person dies, the company receives the insurance pay off. The reason this insurance is of utmost importance is because the death of a key person in a small company often causes the immediate death of the company. The basic reason for the key man policy is to help the company survive the tragedy of loosing the person who pilots the business. The company can use the proceeds for expenses until it can find a replacement or in some dire situations, gives the company some options other than outright bankruptcy.