Neeraj Gupta the CEO of
Insurtech Middle East & Africa

Why Insurers and Employers Must Lead The Way to Close The UAE’s Income Protection GAP

OPINION-ED BY NEERAJ GUPTA – For an economy to truly thrive, resilience is key — especially during a downturn. The biggest resilience benchmark for any economy is the insurance cover that its citizens hold at any given time, the ones that protect their families for long term against a financial emergency, in case the earning member is not alive.

Every economic downturn makes countries and people look more deeply into insurance and their financial preparedness for emergencies. The COVID19 has only initiated these conversations again, in terms of where the UAE region stands in terms of the insurance protection gap. UAE is a very unique region, as nearly 90% of the population comprises expats, out of which almost 60% are South Asians and the resident population is little over 11%.

For the uninitiated, to explain the income protection gap, I will quote a very simple example, let’s say if you earn 150,000 AED every year, the life insurance cover must be at least 10 times this figure. This will mean if anything has to happen to you today, your family will have at least 10 years of the earning members income available to fall back upon. In this case, if the person has no life cover, the income protection gap is 1.5 million AED (150,000 x 10).

In the current scenario, when the COVID19 pandemic outbreak has brought the world economy to its worst slowdown since the 2008 recession, life insurance penetration in UAE stands at a mere 0.7% and overall figure for life and non-life insurance is 2.9% of the total population, this is way below the 6.1% global average. Even smaller countries in South East Asia like Taiwan and Hong Kong, the insurance penetration is more robust at 20.88% and 18.16% respectively.

Why is this a pressing scenario for the income protection gap?

Insurance has always been projected as an ‘important’ product yet explained in the most ‘complicated’ way to the masses. However, there are two major reasons behind this huge income protection gap prevailing in the UAE region.

  1. Lack of consumer awareness

An increase in demand for modern medical care by the rapidly growing population, rising literacy levels, and technological advancement has led people to high expectations from the healthcare industry. However, the demand for insurance is still sluggish, this is not because of negligence but lack of awareness. A Zurich Insurance survey revealed that almost 75% of the expats in UAE do not have any type of income protection insurance. Given the fact that in the UAE, there is no state provision for expats to cover loss of income due to illness, disability, or premature death, this responsibility lies on an individual to secure their household by buying an adequate life cover through term insurance.

  1. Misunderstanding investment products as life insurance

Life Insurance even today in the Gulf remains to be a push product, the majority of which is sold by brokers or recommended by a financial planner for investment purposes. These saving products are more inclined towards investment rather than protection, hence life cover offered by such products is a very small one. Which means, the cost is higher considering the amount of life insurance cover one gets. However, if we talk about pure protection term life insurance, the cost to cover ratio is quite low, For a 30-year-old male, a 500,000 AED term insurance is available at a yearly premium of 700-900AED online.

What is required to close the protection gap? 

  1. Consumer awareness is paramount

At an individual level, the answer is pretty simple, we need to financially protect ourselves from death, disease, and disability to make sure that the sudden death of the earning member does not hamper the existing lifestyle of the rest of the family members. Buying a cover equivalent to at least 10 times your income, plus any mortgage amount you owe should be your ideal sum assured for term life insurance, to begin with. For example, you earn 100K AED a year and have a mortgage/loan of 500,000 AED. Then 10 times your yearly income in addition to your loan, which in this case is 1.5 Million AED is the minimum life insurance cover you should have to insure your family’s financially sound future.

  1. Employers & Insurers can lead the way

Coming from my learnings of how we worked together with the larger ecosystem, especially insurers in India, where we have built a $150 Bn+ protection cover, the UAE market can replicate the model by launching more affordable term insurance plans. Insurers will need to lead the way for creating more robust term life products that eventually help bridge the income protection gap, and ensure technology plays an enabling role in digital underwriting and making the purchase journey easier and convenient for consumers.

Employers, on their part, can create awareness among employees, by informing them of benefits of a term life cover, and possibly including the same into their compensation packages. For the region to truly thrive and become resilient for its overall population, I believe that the time has come for term life insurance to become part of the wider financial portfolio of households here.

Neeraj Gupta the CEO of
Neeraj Gupta, CEO,

Neeraj Gupta is the CEO of, which is the overseas venture of India’s biggest insurance aggregator Neeraj envisions fostering a behavioral change in the UAE relating to how finances and social security is perceived in the region by the masses and promote digital channel as the preferred medium for the consumers when managing personal finance. Furthermore, he seeks to rejuvenate the FinTech ecosystem in the state by offering a robust alternative to traditional methodologies through Prior to his elevation as the CEO of Policybazaar UAE, he was heading the Motor Insurance vertical for the flagship venture in India.

Views in this opinion-ed are those solely from the guest author 


  • Executive Economic Development Advisor (Emerging Markets) | Contributor

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