Do you have the right insurance to cover the triple D’s?

Your term life plan would pay you nothing if you survive a critical illness such as heart attack that can leave a big hole in your savings. What are your options?

Do you have the right insurance to cover the triple D’s?

If asked, nine out of 10 people – probably all 10 – will know who Michael Schumacher is. They will say he is a sporting legend, an ace Formula 1 driver, and some may even assert he was the greatest ever on the circuit, and they will probably be right.

However, not many may know that for the last six years, Schumacher has been under intensive medical care after a skiing accident in December 2013 left him in a coma for a long time. Reports back then said he was lucky to have escaped death, as his head had hit a rock. The last we heard of his condition was back in January 2019, when his wife issued a statement saying “he is in the very best of hands”; save for that, we know nothing – not even if the iconic racer can walk, or even get up from his bed. 

Who would have believed it – someone who was never seriously injured while racing, today possibly facing a life of a cripple because of an off-track accident? Equally startling are the treatment costs; by one account, his family is spending about £50,000 a week – or a little over Rs 45 lakh, every seven days! And this has been going on since December 2013.

Related: Critical illness rider: A must for Indians 

Triple D Cover 

According to Celebrity Net Worth, a website that tracks the total assets of celebrities, Michael Schumacher has an estimated net worth of $800million (£632 million), obviously, he can afford the best treatment the world has to offer.

Plus, he is a seven-time F1 champ – i.e. a professional sportsperson; when was the last time you heard of a world champion athlete who is not insured against crippling accidents? Schumacher’s insurance, plus his sponsorship contracts, probably cover all the medical costs his family is bearing now.

Now imagine yourself in a similar position. You don’t have to be a top-draw athlete to feel how badly a debilitating mishap can hit one’s income and financial stability. If anything, it can only be worse. And frankly, life insurance and health plans don’t really help: the life cover means nothing if you survive an accident – or even a critical illness such as a heart attack, and the health insurance will probably cover the hospital costs, but there is no lump sum if you don’t survive the illness.

Related: Is your Health Insurance plan adequate to cover critical illness? 

It is the same with term life insurance; such a plan pays a lump sum to your family only if you, as the policyholder, die within the term of the policy due to illness or in an accident. But if you survive, your family could even be reduced to struggling to manage daily expenses in the event your savings were exhausted on your treatment; there will no relief from the term insurer.

So does that mean that there is no alternative to becoming an HNI like Schumacher? On the contrary, there is: one can always take a term insurance plan with a critical illness and disability rider benefits, thereby ensuring a comprehensive Triple D cover with Death, Disability and Disease (treatment) benefits.

With this approach, first the policyholder ensures the death benefit for his or her family – payable for any kind of death – the sum assured or cover amount being paid following the policyholder’s demise during the term period, irrespective of the cause: illness or accident, or even natural.

And then there are the riders, which are additional benefits, a few examples being accidental death benefit, permanent disability benefit, and critical illness benefit; if you take these “riders”, you are actually supplementing your term plan coverage, as your nominee will get financial payout over and above the basic sum assured if a rider-related incident occurs.

Basically, when we talk of a comprehensive cover that provides for “triple D” financial protection in case the policyholder, usually the breadwinner in a family, meets death, contracts a crucial disease or is rendered disable – any of which can make a large hole into the family savings – the way forward is the getting a few riders.

Related: How to customize your life insurance policy with riders 

Various Riders 

However, do remember, if you want to weave a Triple D protective net around your loved ones, it comes at a cost: one is required to pay a higher premium than what you would be normally required to pay for term plans to avail of the riders. 

Let us take a look at these in a bit more detail:

1st D - Disease (treatment) Benefit

**First, there is the rider for diseases, or as they are known in insurance parlance – critical illnesses. As you know, term plans by themselves do not cover the expensive treatments of critical illnesses, the treatment for which are very expensive. 

Heart attacks, cancer, kidney failure, heart bypass surgery, organ transplants, terminal liver and lung cancer come under this list. However, if you get yourself a critical illness rider with your term life insurance plan, you would be paid a lump sum amount for the treatment of the disease. This cover often goes a long way in protecting your savings.

2nd D - Death Benefit

**Similarly, you can avail of the accidental death benefit rider. With this as additional cover to your regular term plan, your nominee or family gets an amount over and above the sum assured under the term insurance in the unfortunate event of your death in an accident. 

Accidental death benefit riders are recommended for people who drive on a regular basis, either professionally like a cabbie or even as someone who commutes to work as a passenger. It is also advised for those whose job requires them to be located / present at potentially hazardous environments; the premiums are likely to be higher than an ordinary accident rider in this case, given the job situation.

3rd D - Disability Benefit

**The third rider you can avail of is the partial and permanent disability rider. It is taken on the ground that the policyholder would be unable to work for sometime after the accident and in the process, perhaps lose a certain amount of income. A permanent disability, of course, implies that the policyholder would no longer be able to work on account of the accident.

The benefit payments are slightly different here: if you as the policyholder are left permanently or partially disabled because of an accident, you will be paid a percentage of the sum assured over the next five to 10 years.

Moreover, the financial payment and the time frame will both be decided at the time of purchasing the term insurance plan, and the calculation is based on the premium amount.

If a policyholder who is disabled as a result of an accident but does not have this rider, he or she should not expect any survival benefit – i.e., nothing will be paid under the term life plan. But with the rider, the policyholder gets compensated from the same term plan when some financial succour is needed the most.

**Apart from these three riders, there is a fourth one – the income benefit rider. This runs on the same principle as the disability rider but without any disability to the policyholder to come into effect. 

In other words, if a policyholder dies during the term of the plan, his or her nominee or family not only gets the sum assured, but also a percentage of the sum assured for the next five-10 years, depending on the plan terms and conditions.

Related: 6 Things You Didn't Check Before Buying Health Insurance 

Critical Exclusions

But even as you make plans to beef up your term insurance with a set of riders, it is essential to remember that from an insurance point of view, not all unnatural deaths are considered due to accidents. This means, if you were to die from one of these incidents, your loved ones won’t be able to reap the benefits of your term insurance even if you have the relevant rider.

One of these is “deaths due to terrorist attacks”; even if it is far-fetched to think that you may be in an area that will be targeted by terror groups, it is better to know of similar such conditions that may deprive your family if something befalls you ever.

Some of these are acts of war, death because of illegal activities like running away from the police, or even hazardous hobbies if you regularly engage in them. Similarly excluded are natural calamities or “act of God” such as an earthquake or tsunami and floods. It is therefore advisable to seek clarifications while buying a rider for term insurance.

Also, in general, the clauses and terms and conditions stated in the offer document remain unchanged through the term period. However, if you develop any lifestyle habits that can cause disability or be life-threatening (like smoking and drinking), the insurer could apply loading – i.e. increase your premium.

Note: Some insurance companies do extend their coverage that arise out of terrorist attacks. It is important to be mindful of the exclusions. So always read the Terms and Conditions related to the policy carefully before buying the product.

Related: 5 lesser-known facts about tax benefits of health insurance

Last Words

Riders vary from insurer to insurer and from plan to plan. On the face of it, when you are availing of a rider, what you are doing is buy yourself an additional benefit on paying some extra premium. However, there is also the fine print, and every rider has its unique terms and conditions. Given this, it is advisable to check before applying for the rider benefit. All about critical illness plans and how to choose on

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or insurance or tax or legal advice. You should separately obtain independent advice when making decisions in these areas

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