Disability Insurance Cover: What It Is And Why You Need It

What is Disability Insurance Cover?

Disability Insurance provides financial coverage for the loss of income due to the insured's inability to work because of a permanent or temporary disability. In other words, it replaces your lost income if you are unable to work for a short or long-term due to an accident or sickness, along with covering the actual medical expenses.

While health insurance covers the medical expenses arising from an accident or illness, a disabled person will still have fixed expenses like rent, children's school fees, loan EMIs, etc., which can become a financial burden when the income suddenly drops or stops. Since life insurance and health insurance do not cover the lost income due to disability, buying a separate Disability Insurance policy or a disability add-on along with your base life or health insurance policy makes sense.

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Here's why you need to buy Disability Insurance Cover:

You might have to be absent from your work:

Spinal cord injuries or major accidental injuries can leave one bedridden. Similarly, severe illnesses like cancer, diabetes, mental illnesses, etc., can cause disability. Such a disability can result in short-term absences of up to two years from work, which may cause loss of pay for the absent days. Having Disability Insurance Cover ensures you get paid if you lose income for the days you are unable to work, along with covering the expenses like medical treatment, medicines, etc.

It replaces your lost income:

A permanent disability can stop you from working and may cause loss of job. In such a case, paying your day-to-day expenses like house rent, grocery, electricity bills, loan EMIs, and children's school/college fees could be challenging. But Disability Insurance can replace your lost income so that you and your loved ones continue living the same lifestyle even if you lose your job due to a disability.

Your family is financially dependent on you:

When you are the family's sole breadwinner, and your family is dependent on you, it is imperative to buy Disability Insurance Cover. Even if you have sufficient savings and investments, a few months without income can exhaust your savings, and it can become financially stressful to manage regular expenses.

It makes sense to buy when you are young and healthy:

Many of us think we are too young and healthy to worry about illnesses and injuries. But life is uncertain, and a medical emergency can occur anytime without any notice. It is impossible to buy insurance cover after encountering an unfortunate event. Hence, it is advisable to buy Disability Insurance Cover when you are young and healthy.

How Does the Disability Insurance Cover work?

The Disability Insurance Cover depends upon the policy you purchase. However, it typically works as mentioned below:

• Like any other type of insurance, to keep Disability Insurance Cover uninterrupted, you need to pay the premiums regularly.

• The compensation is offered as a percentage of your earned income, typically 60% to 80% of your income, depending on the type and degree of disability.

• In the case of a short-term disability, a weekly benefit is offered as compensation for the lost income of the policyholder. The amount of this benefit and the period is specified in the policy, which varies from insurer to insurer.

• In case of a permanent complete disability due to an accident, insurers typically offer 125% of the sum insured.

• Some insurers offer a waiver on the premiums in case of partial disability.

• The insurers provide the details of the percentage of the sum insured offer based on the type of disablement, such as loss of sight of one eye, loss of sight of both eyes, loss of one limb, loss of two limbs, loss of one eye and one limb, loss of hearing (one ear and both the ears), loss of speech, etc., which is advisable to check before buying the plan.

• The minimum and maximum sum insured varies from insurer to insurer.

To Conclude:

In today's fast-paced lifestyle, Disability Insurance Cover is a necessity for all the earning members of the family. Before buying the policy, it is advisable to compare the different types of Disability Insurance and insurance providers and choose the right policy for you. Furthermore, thoroughly read the terms and conditions and exclusions to avoid any disappointments or disputes in the future. In order to get a quick claim settlement, ensure you inform the insurer immediately after the incident and do not fail to provide all the correct information when purchasing the policy and filing the claim.

Warm Regards,
Ketki Jadhav
Content Writer