Benchmarking and Why Insurance Backed Investment Projections are Bad for Your Financial Health

jamal-investme2It is standard that all investment managers who either have separate investment mandates or mutual funds will benchmark their performance against an index.

This helps the client and advisors in setting expectations and giving themselves the ability to compare an active investment manager vs a passive investment.

However, Insurance backed savings and investment schemes do not do this.

They take a gross performance of an underlying asset class and then make projections on the return of your savings or investment plan.

These projections have nothing to do with reality and as such set the wrong expectations for the investor.

It is a well-known fact that 50% of investors do half of what the market does. Also, the projected returns by the insurance companies do not include the fee structures which at the time of writing can be as high as 4-5% p.a.

It is not surprising that clients are feeling disappointed. In this instance, the wrong expectations are being set and, it is most unlikely the client will achieve his or her goals.

Why are these projections from insurance companies not based upon the average return of their clients?

Take time to absorb that statement.

The insurance companies have empirical data to be able to benchmark their clients returns against the index’s so it is not a lack of technology.

I will make an intelligent assumption, if they showed the average performance of client’s vs the projection, no one would invest this way.

Protection and Investments do not belong together. They contradict themselves. Investments are a cost conscious structure, insurance is not.

The UAE IA’s Circular No. 12: ‘Advisers, get ready to be registered, tested’

Towards the end of last month, the United Arab Emirates Insurance Authority quietly went public with a 26-page synopsis of its latest thoughts with respect to its already-flagged-up plans to introduce a raft of new regulations governing the way life insurance and insurance-based savings and investment products are to be marketed and sold in the country. 

The IA regulations package, which is currently being referred to simply as “Draft Circular No. 12 of 2017”, updates the IA’s previous missive, Circular No. 33 of 2016, and in so doing, contains a number of new elements – the most surprising of which is a change is in the minimum requirements for insurance intermediaries looking to practice in the UAE, and news of plans for them to be registered, according to Gordon Robertson, founder and director of Investme Financial Services.

Below, Robertson, pictured, takes an in-depth look at Draft Circular No. 12 of 2017 (subtitled “Draft Regulations Regarding Life Insurance and Family Takaful Business in the UAE”), and shares some of his findings and conclusions – a key one of which is that the UAE’s advisory industry is currently “not prepared” for the changes it will soon be expected to take on board. 

Since last November, we have been aware of the coming changes in the way insurance-backed savings and investments are sold and marketed in the UAE. There were hopes that “Circular No. 33”, as we came to know the document outlining the proposed changes, might be watered down.

Now that we have the next instalment of what the Insurance Authority is planning to introduce, it says, as soon as possible, in the form of Draft Circular No. 12, we find that although there have been some minor changes as to the implementation,  the real surprise lay in the way the IA is proposing to regulate the UAE’s army of financial intermediaries.

If the regulations take effect as set out here, it is clear that quite a few intermediaries will be forced either to close, merge, or leave the industry in the UAE.

The timing hasn’t been formally set, but the Insurance Authority has made it clear that it is setting a May 11 deadline for input on its proposals from “life insurance companies and family takaful operators and other interested parties”, after which it is hoping “to issue the final regulations without undo delays”.

Once published in the Official Gazette, much of this will become law immediately; some of it a year later, and the rest in another year’s time.

These proposals will clearly alter the face of insurance-backed lump sum and savings programmes in the UAE. This is possibly not surprising, as they’ve been brought about in response to a huge number of mostly-justified complaints from clients who have been reacting to what they consider to be excessively high fees, the lack of commission disclosure, and up-front commissions, as opposed to commissions being spread out over the life of a policy.

What the Insurance Authority is proposing to change:

Savings products

  1. The maximum fee that advisers, under the new proposals, will be allowed to charge on savings products is 4.5% of the periodic premium (investment portion), to a maximum of 90% of the first-year premium (down from the current 7% to 8% level).
  1. First year commission is capped at 50% of the annualised premium, or 50% of the total commission paid, whichever is less. The rest will be paid over the life of the policy to the adviser.This will be paid by the product provider, and not through the client’s account. There will be a commission claw-back against the agent during the first five years, based upon the first year’s commission.

Ten percent of the annualised premium (protection portion), times the number of years of the policy, with a cap of 160% of the first years premium (single premium is 10% of the premium).

Example A: regular savings programme

Here’s an example of how it would work. Let’s assume someone has savings of AED100,000 (£21,156, US$27,225) to invest in a regular savings programme each year, for the next 15 years. This would break down as follows:

a. AED90,000 for investments,  and

b. 10,000 for the protection (insurance).

Commission would be: 90,000 x 15 x 4.5% = 60,750

10,000 x 15 x 10%  = 15,000

Total commission would then be AED75,750, of which 50% would be paid to the agent in the first year, and the remaining amount over the life of the policy.

Year One, for the agent, would be  half of  AED75,750 , or in other words, AED37,875, with AED2,525 annually for each of the next 15 years.

However, the first-year commission would be subject to a commission claw-back during the first five years of the policy.

[Important note: The minimum amount insured, under the new regulations, is now 10%, up from the existing 1%.]

Example B: Term products (no maturity benefits)

Under the Insurance Authority’s new regime, the maximum commission that may be deducted is 10% of the whole premium, or 160% of the annual premium, whichever is less.

In other words, a client saving US$1,000 for ten years would pay a maximum commission of US$12,000 (or 1,000 x 12 x 10, for a total commission of US$12,000.

Single premium policies will have a maximum commission is 10%.

 Retrocession/trailing commission

The adviser can still be paid a trailing commission; however, the fees can no longer be recouped from the product.

In other words,  if a client buys a current mutual fund, it traditionally has had a high Total Expense Ratio (TER); this is because part of that TER was being reimbursed to the adviser. This will no longer be permitted.

As such, the funds will have a lower TER, giving a higher return to the client. However, that may be reduced by having to pay a higher commission to the product provider (they are not allowed to breach the previous overall commission limits).

Short term products

Maximum commission for life and takaful products in the UAE is currently capped at 25% indemnity commission (this is where a life company pays commission upfront to an intermediary based on the full value of the policy).

This is being stopped, and replaced with a system whereby the commission will be paid when the client pays the premium.

Products with an insurance portion below 10%

Going forward, these will only be able to be marketed when it is clearly stated in a bold red font that “the product has a limited or no life protection benefit”. The customer’s signature is required immediately below this disclosure.

Takaful products

The rules governing the sale of takaful products are similar to the way general insurance is structured.  However, the wakala and muduraba fee for short-term products is set at a maximum of 35% of gross written contribution.

Multiple channels
Going forward, clients will no longer subsidise other sales channels. This will help reduce costs to most clients, as they will be paying only for the sales channel they are using.


  1. All parties to the transaction must sign off on the product sales document, clearly disclosing each one’s responsibilities. This includes the insurance intermediary, the agency representative, the broker etc. The documents must be in both English and Arabic.
  2. It was the usual practice previously that before an adviser gave an investment product proposal to a prospective client, they would often ask for certain documentation, such as a copy of the individual’s passport, visa, bank account information, etc. Under the new regime, this will not be allowed.
  3. No product will be able to be sold without all the relevant documents, and a copy of these must be supplied to the client.
  4. A declaration that the client signs will say that the client is aware the returns featured in the illustration are not guaranteed.

‘Free look period’ is fixed at 30 days minimum

  1. Under the new rules, if an insurance agreement is cancelled during the ‘free look period’, the adviser must refund to the client all of the commissions that may have been taken; then the pro-rated first year commission must be paid back.
  2. The adviser is not allowed to pressure the client to recoup the cost of the adviser’s time and effort in preparing the structure.
  3. If there is a decision to cancel, then the client will be refunded their full premium. This may include any profit or loss on the fund but will not include the bid and ask pricing of the fund.
    If there has been a cost of a medical exam as part of the sale process, that can also be charged to the client. The client will receive a copy of the receipt for the medical as well a copy of the medical report.
  4. the intermediary is not allowed to ask the client why they want to cancel. However, a third party, such as the company or other representative, may ask, so long as they do not abuse this right by using pressure tactics.

Illustrations to be given to the client

Under the proposed regulations, product illustrations given to clients must show:

  1. The frequency of payment to be used, such as monthly/quarterly/annual/single payments.
  2. The full and proper name of the plan; its sum assured, coverage term, and premium payment term.
  3.  The death/protection benefit, account value and surrender value should be clear and distinctly presented.
  4. The premium shown should always be gross of all fees, but the death benefit, account value and surrender value should always be net of all fees.
  5. Any illustration should state that it is either “illustrative value” or “guaranteed value”, whichever applies.
  6. The cumulative plan premium should be indicated.
  7. All compulsory charges must be disclosed.
  8. Revised illustrations must be supplied if requested, and would be compulsory if any top-up premiums are more than 20%, or if there is a withdrawal more than 20%; also, if there are changes to benefits, this must also be disclosed separately with a revised illustration.
  9. The life insurance company behind the product being illustrated must quote the gross return, based upon cash flow, and then deduct all other charges so that the client is able to see clearly whether there is any actual benefit in having this type of policy.
  10. Two scenarios at a minimum should be illustrated.
  11. Maximum investment return is based upon the three-month EIBOR (Emirates interbank offer rate) plus 4%, rounded up to the next 0.5%.
    For example, current EIBOR (1 May 2017) is 1.46%; plus 4% is 5.46%, rounded up is 5.5%. The first calculation, therefore, would be based upon 5.5%.
  12. The second scenario must show a clear picture of the effect of charges or a reduction in yield. This will illustrate the effect of all the charges, if the illustration is not clear, then they must show a zero-pct. return.
  13. Under the new regulations, any fees paid by a mutual fund to the IFA, or to the IFA’s company, are considered to belong to the client, and must be reimbursed to the policy holder.
  14. Surrender charges and the surrender value of the policy at the end of each year must be provided as a separate document. The font must be in red, and the client must sign this document separately.
    If there is a discrepancy between the illustration and the valuation, then this must be justified by the actuary.
  15. For “with profit” policies, a qualified and appointed actuary must certify the illustration before it is shown to any prospective clients. The illustration should also be consistent with the valuation reports, and if it isn’t, the actuary may have to explain why it’s not.
  16. The annual valuation report has to be sent as a separate document, and not bunched with other documents. The “font” must be red, and the client must sign receipt of this document.
  17. To ensure that that the profitability of each savings product is achieved throughout the policy period, and that the policyholder is not heavily penalised for the company’s profit in the initial year(s), the actuary must ensure that any surrender charges are equitable between the provider and the client.
    These charges are only to mitigate risk in relation to the actual expenses incurred by the provider.

Declaration by the policy holder

  1. Under the new regulations, the client will be required to sign a declaration stating “I have received a copy of this illustration and understand that non-guaranteed elements illustrated are subject to change and could be either higher or lower. The intermediary (John Jones) has told me that they are not guaranteed. Further I confirm that insurance intermediary (John Jones) has not made any verbal or written communication, electronic file or any other material that is different from this illustration”.
  2. A statement to be signed and dated by the intermediary or fund manager must be included, saying to the effect, “I certify that this illustration has been presented to the applicant and that I have explained that the non-guaranteed elements illustrated are subject to change. Further, I confirm that I have disclosed all charges and fund management fees to the customer, and I have made no statements in any form that are inconsistent with this illustration.”
  3. Historical performance of the top five funds for that product in the client’s risk strategy must be provided to the policy holder.These top five funds are measured by assets under management (size of the fund), and with a minimum of five years’ history (track record) unless the fund has been in existence for less than 5 years.
  4. The client must receive information on all funds available in a period. The client will then select the funds they wish to buy, rather than the company or adviser suggesting a limited choice for the client.This must be disclosed at the point of sale and on an annual basis to the client.These top five funds must be chosen from the range of funds that are available to retail investors within the UAE.

Banc assurance

Banks often buy insurance at a discount from a provider. Under the proposed new regulations, the banks will no longer be allowed to mark up the price, and thus make an extra profit, when selling insurance to their clients.

Under the new rules, the banks will can only be compensated by the insurance provider separately.

Also, banks will no longer be allowed to insist that the client buy the credit insurance from the bank, but going forward, will be obliged to accept a credit life policy from other companies.

Insurance Intermediaries

Any person acting as an insurance intermediary must be:

  1. Employed by a licensed company
  2. Sell only products that are sold by this licensed company
  3. Be licensed by the authorities, and this license must be renewed on an annual basis
  4. Meet minimum educational qualifications for practicing in the insurance intermediary profession, as well as engaging in CPD (continuing professional development) every year
  5. Be at least 21 years old, and have a minimum two years of  experience in the insurance industry
  6. Have no criminal record of a felony or misdemeanour involving moral turpitude, trustworthiness or against public morals, bankruptcy and not having rehabilitated
  7. Never have been suspended or had qualifications cancelled without these having been formally restored while working in the insurance industry
  8. Must have professional liability insurance
  9. Comply with all the laws, regulations, instructions and decisions issued the authority and other relevant legislation

Annual renewal

The intermediary must be able to demonstrate to the IA that they meet the minimum service standards such as:

  1. They hold regular annual review meetings with their policyholders, discussing the progress towards the agreed savings targets;
  2. Their review documentation will include the actual performance of the product to date, and a new projected performance plan, going forward to the intended policy termination date;
  3. An annual gap analysis to enable the client to assess the need for additional contributions, or a change in risk appetite to achieve the planned savings goal

Application for license and registration

The new application form will require applicants to provide:

  1. Their name, nationality, address and place of residence
  2. A copy of their Emirates ID, if a UAE resident; and a current passport, if  non-resident
  3. A certified copy of the minimum qualification and membership from an entity accredited by the Insurance Authority
  4. A declaration that they have never been subject to disciplinary actions by any professional body that they belong to, or by the supervisory authorities in other jurisdictions
  5. A certified copy of their academic and professional qualifications
  6. An official certificate proving that they have never been convicted for an offence involving moral turpitude or trustworthiness along with a declaration that the applicant has never been declared bankrupt or bankrupt and rehabilitated
  7. An undertaking to comply with all regulations and laws issued by the Insurance Authority
  8. Proof of payment of the fees as per the regulations, as well as any other documents requested by the Director General

The IA will notify candidates of their approval or rejection within 20 business days of their having completing their application.

  1. If more information or documents are required, this must be submitted within 60 days of the date of the notification
  2. Failure to supply the information sought will result in the application being cancelled, and a three-month waiting period must pass before the applicant can submit another application
  3. If their application has been approved, and the necessary fees paid, they will then be entered into the official register
  4. If they are rejected, they can appeal the rejection within 30 days. (A Board of Directors decision, however, will be deemed to be final.)
  5. The licence has a maximum validity of one year, and expires on 31 December.
  6. On an annual basis, the insurance intermediary will submit a renewal document with supporting documentation no less than 30 days prior to expiration of their licence.
  7. The intermediary must inform the authorities within 10 days of any change to the intermediaries’ documentation, to ensure continued compliance. 

Commission abuse penalties

Under the new regulations, all forms of commission abuse will be  strictly prohibited. Those who are found to be in violation of this may be subjected to the suspension or non-renewal of their licence.


Once the new laws are published in the (monthly) Official Gazette, the new laws will be implemented as follows:

  1. Fees and commission abuse regulations will take effect on publication
  2. Commissions, disclosure and regulations regarding pure protection will take effect one year after their Official Gazette publication
  3. All other elements of the new regime will take effect two years after publication

As indicated earlier, many of the proposed changes will be seen by the UAE advisory industry as Draconian, and will introduce a dramatic change the entire industry – to the benefit, many of us believe, of the industry’s clients.

The biggest adjustment, for many, is likely to be that of having to comform with the new minimum requirements to become an insurance intermediary.

As mentioned above, the consultation period on the latest version of the regulations is set to end on 11 May.

Documenting Change

It has been described as a ‘game changer’ by some, but whatever the terminology, the changes being introduced by the UAE Insurance Authority will impact on advisers and providers in equal measure, as Gary Robinson has found out by speaking to those affected.

Following an announcement on April 25, the United Arab Emirates Insurance Authority issued its regulations package, which is currently being referred to simply as “Draft Circular No. 12 of 2017” and updates the IA’s previous missive, Circular No. 33 of 2016.

The UAE’s insurance industry regulator has, as expected, decided to go ahead with a planned overhaul of the way life insurance products are marketed and sold in the jurisdiction.

The package of new regulations includes a ­ban on indemnity com- missions, as well as fee limits, new charges on life insurance products, and new rules affecting financial advisers who sell insurance products in the UAE.

Gordon Robertson is the founder and owner of Investme Financial Services, a Dubai-based holding com- pany for a group of financial services businesses operating in the UAE that he launched after originally coming to the Gulf in 1998, to oversee the opening of a Prudential-Bache Securities office.

In the early days, he says, he was “amazed and disappointed” at the quality of financial advice on offer in the region. In the years since then, he has observed the progress of Dubai’s financial regulatory environment with interest, and, at times, some scepticism.

The IFA industry in the UAE, he argues, is “not prepared” for the shock it is being asked to take on board, given the fuller clarification of the licensing and educational requirements for intermediaries.

“Since November we have been aware of the coming changes in the way insurance-backed savings and investments are sold and marketed in the UAE,” says Robertson.

“There were hopes that the Circular 33 might be watered down. There have been some minor changes as to the implementation, but the surprise was the change in regulating financial intermediaries.

“These changes will no doubt mean quite a few intermediaries having to close, merge or leave the industry in the UAE.”


At least one financial adviser that International Investment spoke to in the days after the Board Decision No. 9 document was released said that it revealed the regulator was pushing ahead as planned, “without pulling any punches” and that it had not been deterred by those ­industry players that sought to have the changes brought in more slowly.

The announcement of the decision to go ahead with the package of new regulations, which also cover the Takaful industry, was contained in a draft circular ­on the UAE Insurance Authority (IA) website. It came after feedback from major international life companies and a meeting held with industry.

The UAE Insurance Authority’s proposals

Gordon Robertson of Investme Financial Services takes a closer look at some of the finer details of the proposals.

Savings products.

  1. Under the new proposals, the maximum fee that advisers will be allowed to charge on savings products is 4.5% of the periodic premium (investment portion) to a maximum of 90% of the first-year premium (down from the current 7-8% level).
  2. First year commission is capped at 50% of the annualized premium or 50% of the total commission paid whichever is less. The rest will be paid over the life of the policy to the advisor. This will be paid by the product provider and not through the clients account. There will be a commission claw back against the agent during the first five years based upon the first year’s commission. 10% of the annualised premium (Protection Portion) times the years of the policy with a cap of 160% of the first year’s premium (single premium is 10% of the premium).

Term products (no maturity benefits). 1. Under the Insurance Authority’s new law, the maximum commission deducted is 10% of the whole premium, or 160% of the annual premium, whichever is less. 2. Single premium policy: Maximum commission is 10%Retrocession/trailing (or trail) commission. The adviser can still be paid a trail commission; however, the fees can no longer be recouped from the product.

For example, mutual funds often have a high Total Expense Ratio (TER), this is because part of that TER has been reimbursed to the adviser. This will no longer be permitted.

Short term products. 1. Maximum commission for life and Takaful products is currently capped at 25% indemnity commission.

This is being stopped, and replaced with a system whereby the commission will be paid when the client pays the premium.

Takaful. Similar to the way general insurance is structured, however the Wakala and Muduraba fee for short term products is a maximum of 35% of gross written contribution.

Multiple channels. Going forward, clients will no longer subsidise other sales channels. Penalties. (a) All forms of commission abuse are strictly prohibited. (b) All complaints, if found to be in violation may subject the offender to suspension or non-renewal of their licence. Enforcement. Once the new laws are published in the (monthly) Official Gazette, the new laws will be implemented as follows: (a) Fees and commission abuse effect on announcement in the Official Gazette. (b) Commissions, disclosure and regulations regarding pure protection is one year after the announcement in the UAE Official Gazette. (c) All others have a two-year implementation period.

Other key changes include a major overhaul of illustrations to be given to the client, the declaration by the policy holder, disclosures and the ‘free look period’ which is fixed at 30 days minimum. Also, new rules relating to Banc assurance and insurance intermediaries have been introduced.

For more detailed analysis and a link to the 26-page Insurance Authority document, visit Representatives on January 12, and follows on from the IA’s initial announcement last November of its plans to crack down on the industry.

The 26-page document (see left for a full breakdown) says that the IA “invites life insurance companies and family Takaful operators and other interested parties” to comment on the latest version of its regulations before 11 May, but warns that “absolutely no extensions will be granted”, so that it is able to issue the final regulations “without undue delays”. Because of the significant changes that impact on the way products currently are being sold, a number of industry executives have called for more time to prepare.


Still, ­there are few observers that will argue with the changes at least not publicly. Simon Willoughby, head of proposition at ­Utmost Wealth Solutions, who also chairs the Association of International Life Offices, echoed many in the industry when he said that Utmost’s view on the matter was that any move towards higher regulatory standards and greater cost transparency for customers in any market was to be “applauded”.

“The sensible transitional arrangements announced by the Insurance Authority recognise the industry feedback provided since the November announcement, and the level of change this will require for both providers and advisers,” said Willoughby.

Another well-known industry figure noting that he is “pleased” that the IA is moving forward so decisively with its new regulations is Sam Instone, chief executive of AES International, the expat-focused advisory firm with a major presence in Dubai.

“We couldn’t be happier that the IA have moved forward with all of this without delay,” Instone said. “Individual qualifications, CPD and registration will raise professional standards. Commission caps and an end to large indemnity commissions will be fantastic for consumers, and it is an excellent step forward for the UAE.”

As for as the likely impact, he said he thought it would result in “dodgy financial salespeople” leaving the UAE, possibly to “pop up somewhere like Kuala Lumpur” next. Nigel Sillitoe chief executive of the Dubai-based marketing consultancy, Insight Discovery, also welcomed the Insurance Authority’s announcement and said the new regulations were certain to “be­ welcomed by both distributors and consumers”.

“Invariably there will be operational issues for distributors in the short term, especially with the proposed commission caps,” he noted. “There will also be some players frantically looking to create new products and product codes – different operational structure to each product in each GCC [Gulf Cooperation Council] market, rather than a generic product across each – to make sure they comply, while others will be conducting full strategic reviews of their licensing going forward.”

Sillitoe noted that the United Arab Emirates was still “an emerging market”, and that, while this made it an exciting market, this needed to be remembered when comparing it­ “with other, more mature, jurisdictions”.


In last month’s edition of International Investment, Bryan Low,­ a long-time analyst of the cross- border life insurance industry, issued a stark warning about the possibility that a precipitous decline in unit- linked life insurance product sales in two key Asian markets would likely next hit next in the UAE.

Low points out that “the regulator’s initial proposals suggest a Hong Kong-style scenario that would have a significant impact on advisers’ use of unit-linked linked life products, and therefore, on many advisers’ traditional business models”.

As for the life insurance companies currently active in the UAE market without a local licence, the impact is likely to be “even more profound”, Low added.

“Sales of unit-linked savings and investment life policies in Hong Kong in particular have been decimated, falling by a whopping 89% across the last five years,” Low, who until last year spent a decade and a half as a cross-border life insurance industry consultant, added.

“Although the fall in sales in Singapore has been less dramatic, the next round of regulatory changes there will impact on the spreading and capping of commission, and prompt a further sales decline.”

This fall in sales occurred “in direct contrast to Asia’s continued economic prosperity” during the same period, and took place “in spite of extensive efforts by major multinational life companies to have locally authorised products in these markets and to promote them on a fully-regulated basis.”


Once published in the UAE Official Gazette many of the proposals will become law immediately, some in a year and the rest in two years.

Robertson adds that the proposals will alter the face of insurance-backed lump sum and savings programmes in the UAE, with changes to the minimum requirements to become an insurance intermediary, the “biggest news” of all.

“This [release of the document] is possibly not surprising, as it’s been brought about in response to a huge number of mostly-justified complaints from clients who have been reacting to what they consider to be excessively high fees, the lack of commission disclosure, and up-front commissions as opposed to commissions being spread out over the life of a policy.”

“As can be seen, many of the proposed changes will be seen by the UAE advisory industry as draconian, and will change the entire industry – to the benefit, many of us believe, of the industry’s clients.”  ■

A Must Have For 2014 – Getting a Life Insurance

We all know that life insurance is an essential part of our financial planning, and since we’re already at the start of 2014 – it’s a must that you get an insurance policy that is suitable to your circumstances. This year you need to reassess your financial priorities, address your finances and make sure that you are getting the most from your hard-earned money.

To protect your future and the welfare of your family, one important area that you need to think about is life insurance. In case you die, you need to ensure that your loved ones are secured and they can expect something financially, so they aren’t left out of pocket. For this purpose, you need to get a life insurance and getting one is no longer a luxury because it’s incredibly affordable.

Continue reading A Must Have For 2014 – Getting a Life Insurance

Examining the Credibility of Comparison Sites

When I was reading an article regarding comparison websites in the UK, I was a bit surprised to learn that there were some comparison websites that do not really compare the prices and quality of insurance products. As a matter of fact, fourteen price comparison sites are now being investigated due to reports that they may be misleading customers.

The Financial Conduct Authority is currently examining these sites, and they want to check for any activity that can be considered as conflict of interest. One example is when a comparison site is promoting deals that they want customers to buy and focusing too much on the price of the product rather than quality and customer service.

Continue reading Examining the Credibility of Comparison Sites

How to Avoid Being Broke In Dubai?

If you are working in Dubai and you’re earning at least Dh20,000 per month, but you no longer have money in your savings account, then you will most likely be ruining your chances for a good future in the UAE. As a matter of fact, this is a sad reality for thousands of expats who came to the country with dreams of earning big money, but only to end up as broke with hardly enough savings to support their daily needs. Expats who spent years of living the high life or were lured by various discount offers and shopping festivals are the most common candidate for this dilemma.


Usually, people who succumb to temptation like those who want a bigger villa, nicer car and pricier signature items are trading their present for a bad future, according to some financial experts. Take the case of Hans, a German working in Dubai for almost 10 years. He has never been married and has no children, but he has gathered an accumulated debt of Dh250,000 on six separate credit cards. His bills, food and rent take up most of his Dh27,000 paycheck, and this has left him with no savings or money at the end of the month. Hans earns well, but he is struggling due to his debt and his chances for having a good future in the UAE are quite grim.

How can you protect your finances in Dubai?

When you come to Dubai to live and work, then you must have a positive mentality. You need to maximize your earnings by listing all your financial priorities. So, what would be your priorities?

  1. Get a pension plan – In 2012, Dubai has become the first Gulf state to have a pension fund specifically for expatriates. This will guarantee that expat workers will receive their ESB (End of Service Benefits). Financial experts also think that a pension fund can help protect expats in their retirement years. However, before you get a pension plan, you need to check if you’re dealing with a reputable company (beware of high costs and long lock-in periods).
  2.  Avoid getting too many credit cards – Expats are tempted to get as many credit cards as they can, because it is relatively easy to acquire one in Dubai. When you have credit cards at your disposal and you go to a mall, chances are that you will end up shopping for items you don’t really need.
  3.  Always include savings in your budget – It would be wise to set your savings up to 30 percent of your total net income. In the UAE there is not social buffer like in Europe, no unemployment and no pension. That is why there is no tax. From the moment you land and until the moment you take off, put 30% away. If it means going without your latte, then go without the latte, the alternative is leaving and having built nothing for the future.
  4. Diversify your investments – this only means that you should not only put your money in the bank, but you should also invest in other fruitful ventures like buying a property that would generally increase in value over time. It would also be a great idea to put some of your money in stocks or mutual funds that could provide you with a good long-term growth potential.
  5. Get a life insurance – I am against insurance savings packages due to large costs and lock-in periods. Instead invest directly (it is cheaper) only take out insurance for your needs, it is much cheaper and more flexible. Also consider critical illness, who knows you may fall seriously ill and still have to look after your family. Tip.. if you buy a property, banks will insist on life insurance. The banks tend to be expensive. Save money by using your current life insurance or take out a new one. Check to see that this is allowed with the bank, consider another bank if they do not, you may save a small fortune on this tip.

My Advice:

Seek the services of a credible financial advisor or a firm who has years of experience in the financial industry, especially those who are also living in the UAE for quite some time now. These experts will give you some good options which you can choose to secure your future in the UAE. Also, you need to balance your wants against the needs and demands of your family.

Is Getting a Home Insurance in Dubai the Best Option For You?

home insurance in dubaiHome insurance is not the most popular type of insurance policy in Dubai. This is due to the current peace and order situation in the emirate. In fact, Dubai is a relatively peaceful city with no significant cases of theft and burglaries. However, it’s still advisable to get a home insurance, because it will also protect you from other unforeseen incidents like leakages and flooding, fire, accidental damages and vandalism. So, having a home insurance will not only protect you from burglaries and theft, but it will also protect your property from several eventualities that might happen in the future.

Basically, a standard home insurance policy can insure the contents of your home. But the policy can also be tailored according to your preferences. You can include a tenant’s liability coverage that will cover for cases where the tenant is legally liable for the damage in your property. You can also extend your policy and add accident insurance coverage for domestic helpers. In most cases, plan holders will also integrate compensation for use of alternative accommodation. This particular policy will provide you the means to receive an amount from the insurance company, in case your home becomes uninhabitable.

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