UAE Property Buyers with Mortgages Urged to Opt for Term Insurance

UAE: Why Property Buyers with Mortgages Should Consider Term Insurance

Property buyers in the UAE who opt for mortgages are increasingly being advised to take term life insurance. This provides a critical safety net, ensuring the loan can be repaid in case of the borrower’s untimely death, safeguarding both lenders and families from financial strain.

The surge in off-plan property sales in Dubai and the UAE has driven a parallel increase in term life insurance uptake. In November, Dubai’s property market recorded 12,543 transactions, an 18% increase compared to the same period last year, with sales values totaling Dh30.5 billion. Off-plan sales accounted for 60% of these transactions, valued at Dh15.8 billion, reflecting a 35% year-on-year increase.

Mortgage lenders often require life insurance as it ensures the repayment of the outstanding loan balance, reducing financial risks for both the borrower’s family and the lender. For high-value mortgages, term life insurance adds an additional layer of financial security.

Both expatriates and Emiratis are typically required to have term life insurance when securing a mortgage from a bank. Specific policies, like mortgage protection insurance, cater to this requirement, though any term life insurance policy may suffice. Notably, developers do not mandate term life insurance for property purchases.

The growing property market and mortgage-related term life insurance requirements have significantly contributed to the rising demand for such policies. This trend is particularly evident among expatriates who seek to secure their families’ financial future while investing in property.

The primary buyers of term insurance in the UAE are individuals and families, as companies in the UAE generally prioritize health insurance due to regulatory requirements. Individual term life insurance policies remain the preferred option for tailored coverage that meets personal needs.

Factors Affecting Premiums

The premium for life insurance tied to a mortgage of Dh1 million depends on several factors, including the borrower’s age, health status, and loan tenure. Younger, healthier individuals typically pay lower premiums, while pre-existing health conditions may increase costs. For a healthy non-smoker in their 30s or 40s, the annual premium for a 20-year term with Dh1 million coverage ranges between Dh1,200 and Dh2,000.

 

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