Dubai, UAE; February 20, 2017: UAE residents are willing to spend more on protection compared to the global average. This is against the financial impact of critical illness, according to insights released today by insurer Zurich International Life, Middle East (Zurich)*.
Critical Illness insights found a disparity between the willingness to spend to protect oneself versus the current level of protection in the UAE.
In the UAE individuals are willing to pay an average of 6 percent of their monthly income on insurance premiums, this compares to the global average which is at five percent.
Furthermore, one in five individuals in the UAE are willing to pay ten percent on the same.
Despite these findings 76 percent of UAE residents are underinsured and 85 percent of women are not covered for critical illness. One of the main reasons why there is a low level of protection in the UAE is the perceived high cost. However, the amount people are willing to pay is higher than the average cost of insurance for most of them.
Jason Waldron, protection expert at Zurich International Life comments: “To determine how much critical illness cover you need Zurich recommends, as an absolute minimum, taking your annual income and multiplying this by four. This will ensure that you can afford to maintain your current lifestyle while you are out of work and recovering. It’s important to note recovery from a critical illness is highly individual and it could possibly take longer than four years for you to fully recover.”
Example of living expenses in the UAE for a dual income household with two children, with a monthly income of AED 40,000:
|Food and groceries
|Utility, TV and communication bills
|Clothes and footwear
|Transport and fuel
|Entertainment, recreation and leisure
|Health and fitness
|School fees (two children in primary school)
|Savings and investments (Education, retirement)
|Insurance premium (life, home, car...)
|House help (nanny/maid)
|Other expenses, bank loans, services or provisions
|Total monthly expenses
|Total annual expenses
|Total expenses for 4 years
As well as living expenses, the report highlights a lack of knowledge of the hidden costs when being diagnosed with a serious or critical illness.
It is quite common for confusion between critical illness cover and private medical insurance (PMI) to occur. While PMI might cover some or all medical bills, there tends to be an annual limit and individuals might also be required to co-pay a percentage of the bills.
The medical bills can sometimes just account for the tip of the iceberg when being diagnosed with a critical illness. Some of the hidden costs are:
A) Reduced income: Clients may have to reduce their working hours, or stop working, which would result in a loss of income. Based on a report by Macmillan**, almost one in three (30 percent) of people living with cancer experienced a loss of income as a result of their diagnosis. A third of respondents (33 percent) stopped working either permanently or temporarily, depending on recovery times.
B) Hidden healthcare costs: A significant proportion (41 percent) of people living with critical illness incur costs for other healthcare needs. These range from prescription medicines not included in personal medical insurance, clinical psychological services, physiotherapy, speech and language therapy, occupational therapy and dietetics.
C) Lifestyle costs: Over a third (37 percent) of people incur costs: for replacement clothing due to rapid weight loss or gain; specialised equipment and home modifications, such as wheelchair access, which can be particularly expensive.
D) Other costs: Some costs are difficult to quantify, such as regular trips to medical appointments, travel, wigs or hairpieces due to hair loss, and increase in household bills such as utilities, groceries and telephone.
Interestingly people do not consider themselves at risk, in fact 97 percent consider themselves healthy today. Zurich claims data shows a different reality as Waldron explains: “The average age of Zurich’s critical illness claimant is 48, with Zurich’s youngest (adult) claimant for critical illness being only 29. Unfortunately, critical illness can strike anyone at any age, at any time. Our youngest (child) critical illness claim came from a four year old. Zurich offers free critical illness cover to children (age 1-18) when an adult critical illness policy is purchased.
“Adopt a healthier diet, get regular exercise, and quit smoking to help lower your chances of developing heart disease and other common illnesses. Regular health check-ups and screenings can help you to identify problems early or before they start. In the same way, regular financial check-ups with a financial professional can ensure you have adequate cover as your circumstances change. Stay committed to you and your family’s well-being - this will help you to continue to achieve your goals with the peace of mind that your financial future is protected.” Tip:
*Source: Income protection in the UAE – Zurich International, 2016
**Source: Cancer’s hidden price tag: revealing the costs behind the illness, 2015