Insurance can be more than just a way to protect yourself—it can also be an investment that gives you money back over time. Whether it’s life insurance, health insurance, or an investment-linked plan, understanding how much you’ll get back can help you plan your finances better.
Let’s say you’ve been paying your insurance premiums regularly, but have you ever thought about what you’ll actually get back? Is it just for peace of mind, or are there real financial returns? The good news is you can often get something back, called Return on Investment (ROI). Whether it’s from maturity benefits, market-linked returns, or bonuses, knowing how to calculate your returns can help you see your insurance in a new way.
Now let’s look at how to calculate your return from insurance in the UAE……..
What are the basics that you need to understand?
Before we start with the calculations, it’s important to understand a few key terms:
| Term | Description |
| Premiums paid | The total money you’ve paid over time. |
| Sum assured | You or your family will get the guaranteed amount at the end of the policy or in case of an unfortunate event. |
| Bonuses/dividends | The extra money the insurance company adds is based on their performance. |
| Maturity value | The final amount you’ll get when your policy ends. |
| Surrender value | The amount you’ll receive if you cancel the policy early. |
How to calculate returns from insurance in the UAE – Easy steps
Here’s an easy way to calculate your insurance returns:
1. Identify your type of insurance:
Different insurance policies give returns in different ways:
- Term insurance: Only protects with no payout at the end.
- Endowment plans: Offers both protection and a lump sum payment when the policy ends.
- ULIPs (Unit-linked insurance plans): These are linked to the market, so returns depend on market performance.
Knowing your insurance type is important because it tells you whether you’ll get a return.
2. Add up all the premiums paid:
Add up all the premiums you’ve paid over the policy’s life. For example, if you pay AED 10,000 each year for 10 years, the total premiums paid would be:
AED 10,000 x 10 = AED 100,000
3. Check the maturity value:
Look at your policy or ask your insurance company about the estimated maturity amount. This includes:
- Sum assured: The guaranteed amount you’ll receive at the end.
- Bonuses: Extra payments that the insurer adds, often each year.
- Market returns (for ULIPs): Returns are based on market performance.
4. Consider the surrender value (If you want to stop early)
If you wish to cancel your policy before it ends, ask your insurance provider for the surrender value. This amount is usually less than you’ve paid in premiums, so think carefully before cancelling.
5. Use online insurance return calculators:
Many insurance companies in the UAE offer online tools to help calculate your returns. Just enter basic details like how much you’ve paid, the policy term, and growth rates to get an estimate.
6. Include bonuses and dividends:
Some policies, like endowment or whole life insurance, give yearly bonuses. These bonuses can increase your final return, so remember to include them when calculating.
7. Adjust for inflation:
Inflation reduces the value of your returns over time. You can use inflation-adjusted calculators to get a more realistic idea of how much your return will be worth in the future.
A quick calculation example (endowment plan):
To simplify things, here’s an example calculation:
| Details | Values |
| Annual Premium | AED 10,000 |
| Policy Term | 15 years |
| Total Premiums Paid | AED 150,000 |
| Sum Assured | AED 180,000 |
| Bonus Declared | AED 30,000 |
| Total Maturity Value | AED 210,000 |
Now, let’s calculate the return on investment (ROI):
ROI = (Total Maturity Value – Premiums Paid) / Premiums Paid x 100
ROI = (AED 210,000 – AED 150,000) / AED 150,000 x 100 = 40%
So, your total return would be 40% over the policy term. Not bad, right?
Why is this important for UAE Residents?
In the UAE, insurance is not only for protection but also for building wealth. Many companies offer both traditional and market-linked plans. Calculating your returns can help you make better decisions. For example, Noor Takaful and Zurich provide plans like endowment and investment-linked policies specially designed for people living in the UAE.
What’s the final takeaway?
Knowing how to calculate your return from insurance in the UAE is important, especially when planning your financial future in the UAE. Whether you want to grow your savings or protect your family, understanding how much you will get from your policy can help you make better decisions. If you’re unsure, you can always use the online tools available to better understand your potential returns.
For a more tailored approach, InsuranceMarket.ae offers insights and guidance, helping you understand the best options for your financial goals and ensuring you make the right choices for your future.
