Insurance is meant to be a safety net that helps you protect what you have worked so hard to earn. The most common reason people do not protect themselves adequately through insurance is the perception that ‘it will not happen to me’. Nowadays, you can purchase insurance for everything, from your life to your electronics. You never know what may happen in the future, so it is important to shield yourself against major events that may have a serious financial impact on your life.
On the other hand, insurance for items that you can afford to replace is something you can live without. Examples often include electronics such as mobile phones, computers, TVs and printers. Extended warranties are a form of insurance, and most companies make sizeable profits from them, which essentially means that most customers never end up using the warranty.
Here are the major types of insurance that can save you from financial ruin:
Medical costs in the UAE are high, and odds are you will visit the doctor a few times a year, so having health insurance is absolutely necessary. One of the most common causes of financial hardship or bankruptcy are medical bills. An unexpected disease or procedure can immediately drain your savings and cripple you financially. Having a health insurance company cover some or most of the cost should be your number one priority.
If you have a family, then term life insurance is the best way to protect them in the event of your death. The cost is very reasonable, and you can pay it on a monthly or annual basis. The first step should be to calculate what amount you should be insured for. To do so, you should consider your:
- annual expenses,
- outstanding debts, and
- future expenses (such as education).
This will give you an estimate of how much your family will need to live comfortably with no income.
Not only is this required by law in the UAE, a comprehensive motor insurance policy will not only cover your vehicle, but will also cover third party liabilities (such as legal expenses or injuries to others) and provide medical coverage as well.
If you have an outstanding home loan in the UAE, then you already have home insurance, since it is required by banks. There is absolutely no reason not to buy home insurance if you own a property. Compared to the value of your house, it can be extremely cheap (less than 0.1% of the property value annually); not to mention it covers what is likely one of your most valuable assets.