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Life insurance for expats in Saudi Arabia: Why it matters
Life insurance is very important for expats in Saudi Arabia because it provides financial protection for their families in the event of death or disability, especially since most of them have families living outside the Kingdom of Saudi Arabia who do not benefit from local social security programs.
Here are the reasons why life insurance is important for foreigners in Saudi Arabia in detail:
- Overseas family protection: most expatriates work in Saudi Arabia while their families remain in their home countries. Insurance guarantees that they will continue to be financially supported in the event of an urgent situation.
- Absence of legal obligation: In Saudi Arabia, health insurance is mandatory for residents including expats, but life insurance is not. Therefore, it is up to the individual to decide whether to insure their loved ones future.
- Limitations of company benefits: Some companies offer collective insurance coverage, but it is often very limited and does not cover all of an expat’s family needs.
- Additional coverage: Insurance policies may include additional benefits such as coverage for critical illness treatment, total or partial disability, and even repatriation expenses.
- Peace of mind: Having insurance gives foreign workers peace of mind that their families won’t encounter sudden financial challenges.
Types of life insurance in Saudi Arabia for expatriates
In Saudi Arabia, expatriates have several life insurance options, which may vary depending on the intended purpose (such as family protection, wealth accumulation, or financial planning) as well as residency status. The following are the most popular life insurance options:
Fixed-term life insurance
- Description: It covers a specific period, for example, 5, 10, or 20 years.
- Compensation: It is paid only if the insured person dies within this period.
- Advantages: The premiums are fairly low.
- Disadvantages: You won’t get any cash back or savings if you’re still alive when the term ends.
Permanent life insurance
- Description: Covers the entire life of the insured, not limited to a fixed period.
- Compensation: Paid out upon death, sometimes includes a savings or investment feature.
- Advantages: Provides long-term savings and part of it can sometimes be used as a loan.
- Disadvantages: Premiums are much higher than Fixed-term life insurance.
Takaful Life Insurance
- Description: An Islamic insurance model based on contribution and mutual support, popular in Saudi Arabia.
- Compensation: If the insured person dies, the beneficiaries get paid, and the contributions are managed collectively.
- Pros: Suitable for expats looking for halal options.
- Cons: Some plans might be restricted or limited in terms of compensation or investment.
Life insurance with added coverage
- Additional coverage might include: Total disability, Partial disability, Life-threatening illnesses, Unforeseen accidents and Injuries.
- Advantages: It provides a wider protection for the family or the individual.
- Disadvantages: It increases the premium significantly.
Local and international insurers for foreigners in Saudi Arabia
Here are some examples of local and international insurance companies that offer life insurance solutions for expats in Saudi Arabia, along with their main pros and cons:
Local companies based in Saudi Arabia
Tawuniya KSA (شركة التعاونية للتأمين)
- Offers life insurance policies based on a Islamic Shariahttps://tawuniya.com/en/corporate/products/enterprise/general-accedent-insurance-compliant Takaful system.
- Coverage includes natural death or death resulting from an accident.
- Option to add benefits such as terminal illness or total disability.
- Typically aimed at residents within the Kingdom, and may be limited in providing coverage for family members outside Saudi Arabia.
Al Rajhi Takaful (شركة الراجحي تكافل)
- It offers life insurance programs with the flexibility to choose the level of coverage.
- Compatible with Islamic Sharia law.
- In addition to protection, some programs also include investment or savings features.
International companies suitable for expatriates
- Worldwide coverage, which is suitable for expatriates with families outside Saudi Arabia.
- It covers death, disability, and critical illnesses.
- The insurance policy can remain valid even if you relocate to another country.
- Best known for health insurance, but also offers other financial protection insurance packages.
- Offers international coverage and high flexibility in adding family members.
Allianz Care
- They offer comprehensive programs for expatriates, including both health and life insurance.
- International coverage, suitable for families who live in two or more countries.