Dubai – MENA Herald: Industry experts at Nexus Group, warn that while one in four UAE residents will suffer from a critical illness before retirement, most basic mortgage protection plans do not cover these circumstances, placing families at risk of higher financial distress.

According to Nexus Group, the region’s leading financial advisor, the high critical illness rates in the UAE can be attributed to a number of lifestyle choices among residents, including unhealthy eating, high work-related stress levels, low physical activity levels, and high tobacco consumption rates. These factors may lead to a variety of health implications categorized under critical illnesses, including cardiac disease, stroke, kidney failure and cancer, which may hinder a real estate investor’s ability to make mortgage payments.  

“With most UAE banks mandating mortgage insurance, a large proportion of mortgage payers impulsively opt for the most basic mortgage protection schemes due to perceived value and convenience. Many of these packages, however, will not protect investors in the unfortunate event of critical illnesses, leaving family members and patients in even higher financial distress,” said Bashar Khatib, Chief Distribution Officer, Nexus Group.

“With the high risks of critical illness in the UAE, it is extremely important that real estate investors carefully evaluate protection schemes before purchasing, and consider premium packages that can help to alleviate potential financial difficulties,” he added.

Many basic mortgage insurance plans, including those offered by some UAE banks, require permanent total disability for customers to be eligible for compensation. This is the least claimed factor as it requires customers to be almost entirely immobilized, thereby helping to keep the cost of insurance plans low. Critical illnesses, however, are rarely covered by basic mortgage protection plans as they are three times more likely to be claimed against than total disability.

In addition to the absence of critical illness cover, many customers do not notice decreasing value conditions that are incorporated in such plans to maintain low costs. A Decreasing Term Plan means that although the mortgage insurance fee remains constant, the life insurance benefit declines through time, reducing the value for customers. Nexus Group advises customers to opt for an insurance package that offers a constant insurance benefit to ensure the best value for their investments should the need to make a claim arise.

Investors are also advised to seek expert advice to determine the most appropriate mortgage insurance plan, and to ensure all elements of the insurance application are detailed and declared meticulously. A trusted financial advisor can help to ensure complex terms and conditions are not overlooked, and that customers are well protected against unforeseen circumstances.