National Bonds unveils findings of financial health check for Q3 2016
National Bonds Corporation, the leading sharia-compliant savings and investment company in the UAE, today announced the results of its financial health check for Q3 2016. The survey found that the majority of the UAE’s residents, comprising both nationals and expatriates, are yet to sign up for takaful coverage while only a minority is covered by traditional insurance against illness and disability.
The financial health check for Q3 2016 that focused on the takaful coverage of National Bonds’ customers included all the customers that had signed up for the Sanadi plan since its launch in April. 73% of UAE national respondents who participated in the financial health check survey pointed out that they do not have takaful life coverage, compared to 27% who are covered by traditional policies. Within the UAE national pool of respondents, 89% admitted to not being insured against disabilities through takaful in contrast to 11% that have traditional coverage against disabilities.
The results among expat residents of the UAE indicate that 83% of all nationalities have no takaful life coverage, while 17% have traditional life insurance cover. In addition, 76% of expat participants in the survey are not covered for disabilities through takaful, compared to 24% that are insured for disabilities through traditional policies.
The financial health check also charted the financial stability of participants. The results of the present survey are encouraging and indicate that 67% of UAE nationals and 72% of expat residents plan to pay off their liabilities and become debt free by end of this year, as opposed to 33% UAE nationals and 28% expatriates who do not plan to free themselves from the debt cycle.
Speaking on the results, Mohammad Bitar, Chief Commercial Officer of National Bonds, said: “We are not surprised with the Q3 results of the National Bonds Financial Health Check - it reiterates our understanding that the awareness about the benefits of takaful coverage is still minimal among the UAE residents. This explains the slow growth of the takaful sector in general. Despite the concerted efforts of many entities in developing the legislative and regulatory system of takaful, we are witnessing hesitation by the public in signing up for traditional insurance coverage, not just takaful.
“The majority of the social strata, regardless of nationality, is unable to grasp the significance of insurance and its impact on an individual’s and family’s stability and security. They also don’t effectively understand the difference between traditional insurance and takaful, let alone comprehend the actual benefits of takaful, which focuses on social cohesion and involves the collective sharing of any burdens. We must intensify our efforts in raising awareness about the significance of takaful, and step-up overall understanding of how it transcends traditional insurance in terms of sustainability and adherence to Islamic sharia law.”
Speaking on the hesitation among UAE nationals towards saving for takaful, Bitar said: “Many UAE nationals work in the public and government sector, and quite often do not feel the need for insurance coverage in addition to that already provided by their employers. However, by partnering with the government sector through our Idikhari scheme - an exclusive savings program for government employees - we are working to raise awareness on the importance of Islamic financial solutions such as sukuk and takaful. With this, we aim to garner greater participation from UAE nationals in supporting a sustainable social development in the post-oil era - takaful is a key component of this integrated strategy.”
Signaling the success of Sanadi, National Bonds is currently settling the first claim for coverage against loss of employment by one of its regular savers via the strategic local Takaful partner. The total amount of AED60,000 will be paid out in monthly instalments of AED10,000 over a six-month period.
Jayalath W, the first customer to claim his payout, said: “Although I save on a regular basis, I was extremely worried about the future. I did not expect to get a positive response from National Bonds this swiftly. My family is fully dependent on my income. As the sole bread-winner if I find myself unemployed for a lengthy period of time, for reasons beyond my control, the fate of my wife and children is worrying. I have recommended all my friends and relatives to sign up for takaful coverage because we’re all subject to compelling circumstances. Regretting developments after they take place is just futile.”
Some of the respondents of the survey have indicated that the Sanadi plan brought them peace of mind. Aly M, a 37 year old Egyptian national who has been a resident of the UAE since 2003, said: “Sanadi has given me hope for the future and provided me with much-needed support - the salary protection facility in particular can help me tide over bad times in case I am rendered unemployed. I believe all UAE residents urgently need to financially secure their families, because no one can guarantee their prospects in the long-term. As parents, we are responsible for securing the future of our children.”
Another expat participant of the Financial Health Check, Alex J, a 35 year old British national, said: “My residency in the UAE has acquainted me with the traditions and culture of Muslims - they hold high ethical standards, and have introduced me to the benefits of takaful. As a diving instructor, I am exposed to danger on a daily basis and Sanadi seemed like the ideal plan to help me save regularly. I have many dependents and in order to uphold my responsibilities towards my family, I must protect them from adverse circumstances. Now, with the salary protection program and the insurance against critical illnesses, I am more committed than ever to a regular savings plan to secure my family’s future.”
National Bonds has developed the Sanadi plan with the aim of contributing to the growth of Islamic financing tools that have proven effective in achieving financial stability. In reference to the 2015 National Bonds Savings Index, it has been highlighted that loss of employment is a significant factor in the choice of savings plans for a majority of the survey participants: 39% of Western expats, 34% of Arab expats, 22% of Asian expats and 10% of UAE nationals.
Sanadi provides coverage of up to 100% of the monthly salary, along with seven types of protection, including protection for job loss. Protection for job loss covers up to six monthly salaries, while protection against death, permanent disability and terminal illnesses cover up to 60 monthly salaries. Coverage for critical illnesses is provided for up to seven medical conditions up to 24 months, along with provision for a second medical opinion and hospital cash benefits. The plan also offers a chance to earn annual returns and higher chances to win rewards on savings as part of the National Bonds rewards program.
National Bonds seeks to instill a culture of savings and investment among the professional workforce in the UAE. As part of this priority, it offers competitive rate of returns among similar financial products in the market, as well as two grand prizes of AED1 million every quarter, one for a UAE national and one for an expat. In addition, regular savers have the chance to win one of 15 exclusive prizes worth AED10,000 or one of 8,000 dedicated cash giveaways of AED50 every month.
National Bonds, which is licensed and regulated by the UAE Central Bank, is a Sharia’a compliant saving scheme that provides UAE nationals, UAE residents and non-residents - with a credible and safe savings opportunity. Minors can also own National Bonds, provided the bonds are purchased by the parent/guardian.
Each bond costs AED 10, with a minimum purchase of AED 100 National Bonds Corporation PJSC announced an annual profit of 3.78% for 2010, which is higher than the market average of 0.46% on saving accounts and 2.40% on 12 months fixed deposit accounts.
NBC’s cumulative profit rate of 26.45 % over the last five years is among the highest payout in comparison to any other similar savings schemes in the UAE. Profit Rate distributed to bondholders recorded a year-on-year growth of 6.3%.
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