What is a Permanent Disability Rider in ULIP?
A permanent disability rider in ULIP plan is an add-on that, if added to your base plan, provides financial protection to the policyholder and their family in case the policyholder becomes totally and permanently disabled due to an accident. Since a ULIP already combines an investment and insurance, the permanent disability rider adds another layer of protection in case the policyholder is not able to earn a sustainable income due to any disability.
How Does the Permanent Disability Rider Work in ULIP?
The permanent disability rider acts as a safety net and pays out an extra benefit to the policyholder if they are met with an accident and are left permanently and totally disabled. Let us understand how the rider works.
- Attaching the rider: When buying the ULIP, you can opt to attach the rider to your ULIP. You will be required to pay a nominal additional premium along with your base premium.
- The triggering event: The rider is triggered if the policyholder is left permanently and totally disabled due to any accident during the policy term. It is essential to note that the rider becomes eligible for a claim as per the terms and conditions of the plan of your choice.
- Waiting period: The waiting period for any ULIP is defined by the terms and conditions of your insurer. Generally, insurers require the policyholder to survive the accident for a minimum period of 180 days before the disability is considered permanent and total and the claim is released.
- Filing the claim: When filing the claim, the nominee is required to submit medical evidence as proof of the policyholder's disability.
- Benefit payout: Once approved, the insurer settles the claim in one of three common ways:
- Waiver of premium: The insurer can waive all further premiums of the ULIP. This means that any further premiums are taken care of by the insurer and the policy keeps on running.
- Lump sum payment: A lump sum payment equal to the rider sum assured is provided to the policyholder.
- Income benefit: Rather than a lump sum payment, the payout is spread across years and paid as regular income to the policyholder.
- Policy continuity: Irrespective of the payout structure of the rider benefit, the ULIP policy continues and can be used to fulfil long-term financial goals.
What Does a Permanent Disability Rider Cover?
The core problem that a permanent disability rider aims to solve is to replace the income-earning capacity of the policyholder, as the policyholder cannot provide for themselves due to total and permanent physical disability.
The permanent disability rider generally covers the following
- Total and permanent disability caused by an accident
- Loss of physical function severe enough to prevent employment
What are the Exclusions Under the Permanent Disability Rider Cover?
While the rider aims at providing financial support to individuals who are no longer capable of earning for themselves and their families, there are certain exclusions under the rider.
- Partial or temporary disability
- Disability arising from illness
- Any disability due to self-inflicted injury
- Disability due to participation in hazardous activity
- Pre-existing medical conditions
Permanent Disability Rider vs Other Riders
Let us compare the permanent disability rider with some other riders to understand the best for you.
| Rider Type |
Rider Coverage |
Trigger Event |
Payout type |
| Permanent Disability Rider |
Total and permanent physical disability due to an accident |
Disability caused by an accident |
Waiver of premium, lump sum, or income instalments |
| Accidental Death Benefit Rider |
Death caused by an accident |
Accidental death |
Lump sum is paid to the nominee |
| Critical Illness Rider |
Diagnosis of any critical illness as specified by the insurer |
Diagnosis of a critical illness |
Lump sum is paid to the policyholder |
| Waiver of Premium Rider |
Future premiums are waived if the policyholder is left unable to pay future premiums |
Death/disability/illness of the policyholder |
Future premiums waived; policy continues |
Conclusion
The permanent disability rider is one of the best riders you can attach to your ULIP as it protects you and your family in the event of a permanent disability. Riders can help you fully optimise your ULIPs and ensure that you and your family remain protected irrespective of the circumstances.
