How Improving Financial Literacy Creates Better Financial Prospects for UAE Families
The everyday struggles and economic hardships of COVID-19 remind us of how vulnerable the health and financial stability of our families can become. When it comes to finances and personal well-being, life always comes first—the former must always support the latter.
In the UAE, protecting one’s family and dependents is the number one insurance-policy element in demand among those seeking insurance. There is an immediacy to improve financial preparedness, confidence, and trust in this case. But too often, adults in the UAE miss out on financial opportunities that could benefit them and their family members—not through lack of opportunity, but lack of understanding and support.
In October 2020 and February 2021, MetLife conducted an in-depth study of UAE families’ financial attitudes, literacy, and security. Among other results, we found UAE citizens generally lacked real familiarity with insurance policies that could help them based on each of their unique circumstances. This has created coverage gaps with real consequences for families faced with job loss, health crises, or other sudden emergencies for which they need financial support.
A lack of financial literacy has real consequences for families faced with job loss, health crises, or other financial emergencies.
There is a real desire among UAE citizens to improve their financial literacy, including their understanding of available insurance as well. It’s therefore up to insurers to help close the knowledge gap between available insurance options and the families who stand to benefit from them.
The Impetus for Financial Literacy
According to our study, 20% of adults in the UAE do not want to buy insurance because they do not understand it. That’s not for lack of interest—UAE adults are highly motivated by factors that contribute to decisions to buy insurance. So, why do these adults prioritize alternative financial investments in lieu of insurance policies that might provide support they need—not to mention enduring peace of mind?
In reality, adults who intend to buy insurance are trying to research more and understand more about the policies available—41% evaluate all of their options thoroughly before deciding to choose one, according to the study. They are taking active steps to improve their financial literacy for the sake of protecting their families, but struggle to understand insurance policies as they read. The onus is on insurance providers to close the “knowledge gap” between insurance products and the families that stand to benefit from them the most.
Financial Wellness Starts with Understanding
UAE adults are mentally ready to purchase better financial products for their families. A deeper analysis of the results shows UAE adults generally “trust financial services companies” as well. But while many UAE adults are ready to begin their search, they remain confused and often untrusting of specific policy details in terms of how they truly help their families. According to the data, “evaluation of choice” is a key behavior among those looking to buy insurance; however, existing lack of familiarity and lack of a clear understanding of products leads to low trust value in the category.
60% of respondents are either not adequately insured or are unsure if their insurance would cover an eventuality, such as critical illness or job loss.
UAE adults are motivated by key drivers that align well with dependable insurance policies—the desire to protect their families, pay off liabilities such as debt, and improve how they manage their personal finances as examples. But they want insurance policies that apply to their unique needs—they want to avoid any surprises when the time comes to activate those policies, where too often they are surprised by unexpected fees and out-of-pocket expenses due to lack of coverage in critical areas, the study finds.
This often leads to poor alignment between policy and needs, or a lack of sufficient insurance coverage at all. A full 60% of respondents are either not adequately insured or are unsure if their insurance would cover an eventuality such as critical illness or job loss. At the very least, they cannot enjoy the peace of mind that comes with sufficient coverage and an understanding of its details.
These shortcomings are particularly concerning among respondents who have experienced an accident that resulted in a disability. Within this group, 62% were impacted by hidden costs found in the small print of their policies; 60% were disappointed in their existing policy as well. Here, a lack of understanding has already driven real suffering and financial consequences for vulnerable families.
It’s Time to Close the Financial Knowledge Gap—and MetLife Can Help
Again, the onus is on financial institutions to close the knowledge gap between insurance products and the families that stand to benefit from them the most. The future of insurance is realizing financial literacy and policy awareness. It is as much about real-world protections as the peace of mind families gain through a deep understanding of those policies and a deeper sense of financial security as they face life’s challenges.
As more UAE families get the insurance coverage they need, financial optimism and peace of mind become much more achievable. For insights into the challenges UAE families face, as well as the coverage and literacy opportunities available to them, access our full-length report based on the study today.