Dubai Expat Secures Family's Future with Life Insurance

Introduction

Sarah, a 49-year-old divorced British expat in Dubai, recently landed a high-paying consulting job. With two young daughters, her mind was often occupied with securing their future education and providing for them if something happened to her. Retirement was also a growing concern.

Sarah knew she needed to invest wisely, but also wanted to ensure her family would be taken care of. Finding a solution that addressed both goals seemed elusive.

Dubai Expat's Dilemma: Protecting Her Family While Planning for Retirement

As a single mother in Dubai, Sarah faced the difficult challenge of balancing her family's financial security with her retirement goals. She sought the guidance of a local financial advisor, eager to explore options that could safeguard her daughters' future while still allowing her to build a nest egg for her retirement.

During their consultation, Sarah expressed deep concern about providing for her children's education and well-being should the unexpected happen. She also emphasised her desire to create a financially secure retirement for herself. The financial advisor listened, understanding the weight of Sarah's dual responsibilities. Together, they explored potential solutions and discovered that a life insurance policy could offer Sarah the comprehensive protection and financial growth she needed. The policy would provide a substantial cash pay-out to her daughters in the event of her passing, ensuring their needs were met. Additionally, it would accumulate cash value over time, offering Sarah a valuable resource for funding her retirement.

Tailored Solution: Income for Life

The financial advisor presented Sarah with Capital for Life's Income for Life solution, specifically designed to provide a substantial death benefit for family protection while simultaneously building tax-advantaged cash value for retirement income.

This unique combination met Sarah's dual needs in a single, flexible, and cost-effective policy. The foundation of Income for Life is an index universal life insurance policy (IUL), allowing Sarah to benefit from potential market gains without risking her principal investment. This appealed to her desire for safety and guaranteed growth.

A Personalised Plan for Financial Security

Working collaboratively, Sarah and her Dubai-based financial advisor crafted a personalised Income for Life plan. This involved an initial investment of US$250,000 from Sarah's existing savings, followed by annual contributions of US$75,000 for 10 years. This structured approach aligned with Sarah's income and allowed her to reach her target investment of US$1 million by age 60.

While initially concerned about committing to fixed annual payments, Sarah was reassured by the flexibility of the Income for Life policy. The advisor explained that she could adjust her premiums up or down based on her changing financial situation, providing the peace of mind she needed to move forward knowing the policy had flexibility.

A Safe and Secure Investment Strategy

The Income for Life policy's cash value growth is fuelled by Sarah's upfront premium and ongoing annual contributions, all working towards securing her retirement income. After considering the different investment options within the Index Universal Life (IUL) policy, Sarah chose to link her IUL policy's growth to the S&P 500 index.

This strategy offered her the potential for market-based returns while benefiting from a crucial safeguard: the insurer's guarantee against stock market losses. This protection resonated with Sarah's preference for a secure, long-term investment approach with her savings.

Family Protection Securing Her Daughters' Future

In the unfortunate event of Sarah's passing, the life insurance policy's substantial $5,100,000 death benefit ensures her daughters' financial security. This sum can cover their education, living expenses, and any other financial needs, providing Sarah with peace of mind and a solid foundation for her children's future.

Tax-Efficient Wealth Transfer and Estate Planning

Capital for Life recommended her adviser establish a trust to own and manage the life insurance policy to optimise Sarah's financial plan for tax efficiency and seamless wealth transfer. This strategic move ensured that contributions to the trust were properly recorded for both current and future tax compliance. Additionally, the trust structure offered flexibility, with the option to later modify it to exclude assets from Sarah's taxable estate while preserving her access to policy income.

Prior to this consultation, Sarah hadn't considered the potential of life insurance as a multifaceted tool for both retirement planning and estate preservation. The ability to create a lasting legacy for her daughters while securing her own financial future proved to be the deciding factor in her approval of the plan. The entire process, from initial consultation to policy implementation, was completed within six months.