Beyond life and health insurance: get insured against disability

Date : 06/06/2016
Read: 4 mins

From fracturing your foot playing football to undergoing a harrowing amputation, accident-caused disability isn’t a one-in-a-million occurrence. With daily newspapers teeming with accident news, it’s better to be financially prepared for an unforeseen mishap than face financial impotency.

Beyond life and health insurance: get insured against disability

Do you fall in the age bracket of 18 to 45 years? If you do, then you have a higher chance of dying from an accident than of natural causes.

India houses the largest population of disabled people in the world; 26.8 Million disabled in India, as per Census 2011, that basically means every 2 out of 100 Indians are disabled.

What is Disability Insurance?

Insurance that offers an income replacement to individuals who become disabled due to an accident and are thus unable to work for a long period.

The concept of disability insurance in India

In India, there are many different ways to obtain protection against the possibility of disabilities.While countries such as the U.S. extend financial assistance in a disability case, and the benefit isn’t a one-off thing but more of a pay-per-month system till either death or retirement, India is yet to initiate and execute a holistic concept of disability insurance along those lines.

Who should consider getting insured against disability?

Absolutely anyone who considers the ‘ability to work’ as an asset must look into this.If you are prone to accidents or play a physical sport or simply want to be prepared in case of an accidental exigency, it is essential you protect yourself against the emotional and financial difficulties that come with disability.

Aren’t Life and Health insurance enough?

It is a common misperception that life and health insurance protect you against all possible uncertainties. Life insurance, in essence, protects your loved ones in case of your death. Health insurance and critical illness help tackle the rising cost of medical care by offering financial assistance to your savings. But what if your savings are not enough and you need to depend on future income? And what if, due to partial or permanent disability, you are unable to earn any more income? That’s why you need to get insured against disability.

What options do you have to get insured?

There are several options that one can opt for, all with their own benefits and coverage:

Standalone Personal Accident Policy

Personal accident insurance refers to a policy which offers compensation in case of eventualities caused due to accidents. Eventualities covered usually include death, bodily injuries, total/ partial disability or mutilation resulting from an accident caused by violent, visible and external means. The types of events that are covered under accidental insurance are rail, road and air accident, injury due to collision or fall, burn injury, drowning etc. These policies are usually offered by General Insurance companies. When buying a Personal Accident policy, it’s essential you ensure that it covers disability as well.

There’s usually no limit to the degree of accident as smaller injuries – but ones that render you incapable of functioning– and major life-altering disabilities are both taken into account.

A personal accident rider on your Car Insurance policy

You can get coverage of up to 2 lakhs for any damage caused to the driver while travelling, mounting, or dismounting from the car. Some insurers also offer optional accidental covers for co-passengers. This rider applies in case of accidental death, temporary partial disability and permanent partial/total disability caused by road accidents.

Accidental total/partial disability rider on your Life Insurance policy

Such riders can be attached to your life insurance policy at an extra cost. The benefit of these riders is that they provide a lump-sum pay-out in case you find yourself disabled and unable to earn income to sustain yourself and your loved ones. This pay-out can help you deal with expenses that arise in the unfortunate and unpredictable event of a disability. You must keep in mind, however, that the rider will only last as long as the base policy.

Income protection plans

These are Term plans with in-built disability benefit that offer monthly payout which increases by a pre-defined percentage every year that the life assured is disabled. These plans compensate for your inability to earn more income due to your disability, by offering monthly pay-outs to replace your income. Also, to factor in inflation, due to which the cost of living is constantly increasing, the value of these monthly pay-outs also increase by a pre-determined percentage every year.

A word of caution:

Different companies offer different terms and there are conditions attached, such as, unless admitted within 7 days from the date of the accident, you’d get curtailed or no hospitalization benefits. So be sure to read and understand these conditions before going for one.