scorecardresearchHere's why you must add a disability rider to your term insurance plan

Here's why you must add a disability rider to your term insurance plan

Updated: 05 May 2022, 06:00 PM IST

Buying term insurance is not enough. There is more to life than just the financial loss due to death. At times, disability results in a problem often bigger than death owing to the loss of income coupled with the expenses for treatment of the disorder.

Paying separately for a disability insurance cover

Paying separately for a disability insurance cover

Most people associate insurance with security. After all insurance companies selling term insurance advertise how their products are carefully tailored to lend a financial cushion to your loved ones when they need it the most. Death is synonymous with the loss of a loved one. The feeling of pain due to sudden death is aggravated by the sudden loss of income of the policyholder.

However, is a term insurance cover enough to survive the tribulations due to a sudden disability stemming from an accident or a disease? Will just a term policy do or should you top it up with some rider benefits to help tide over unforeseen difficulties? You must first check if your term plan policy includes a disability cover too because most online policies do not cover instances of partial or temporary physical disability.

Some term plans bought offline through agents offer more than just a death payout in your absence caused by death. They take care of the sudden financial needs due to accidents or critical ailments or similar incidents. However, for the nominees to avail of the payout, term insurance companies ensure that the policyholders are suffering from total physical disability, thus, rendering them completely disabled to work or earn for their families.

Defining disability

Not all disabilities have to be due to an accident. Some disabilities can be from critical or terminal illnesses too. The idea behind this is that a critical disorder poses an immediate threat to life, thus, restricting from regular, day-to-day activities. These diseases include:

  • Cancer
  • Heart problem
  • Kidney disorder
  • Alzheimer’s disease
  • Third-degree burns
  • Liver/lung failure third stage

Irrespective of the benefits associated with payout and the conditions that trigger this benefit, insurance companies may reject your claim to disability cover on myriad grounds. The insurers maintain that the policyholders or their nominees cannot claim this cover if the former develops the disability due to the following reasons.

  • Any pre-existing disease or condition
  • Attempted suicide
  • Injury inflicted on one’s own self deliberately
  • Indulging in self-destruction activities irrespective of mental health condition
  • Injury or accident caused under the influence of alcohol, drugs or any other substance abuse
  • Disability due to war, rebellion, etc.

How do you receive the disability rider benefit?

Most term insurance companies give their policyholders the flexibility to choose how they would like to receive the disability rider benefit. Usually, the companies give three options to choose from

  • The entire benefit payout in a lump sum
  • The benefit payout is a regular income throughout the designated policy tenure.
  • The benefit would be paid out for the term period till the survival of the policyholder’s spouse.

Policyholders may also choose to receive the benefit payout as a combination of a lump sum amount and regular income for the pre-determined income period, say 10 years.

Features in term insurance policies
First Published: 05 May 2022, 06:00 PM IST