Does Term Insurance Cover Disability?

Does Term Life Insurance Cover Disability?

Yes, a term life insurance does cover disability, but only if you have added the accidental total and permanent disability rider to the base term insurance. With this rider added to the base term insurance plan, the rider sum assured will be paid to the policyholder on his/her accidental total and permanent disability during the policy term. The premiums for this additional benefit can be paid along with the base premiums. 

Note: Before you learn more about the ATPD cover in term insurance, you should understand what is term insurance plan.

What is Accidental Total and Permanent Disability in Term Insurance?

The ATPD, or the accidental total and permanent disability rider in term insurance, is an additional benefit that can be added to the base term insurance at the time of policy purchase. The rider offers coverage against total and permanent disability caused by an accident and pays the rider sum assured to the policyholder. The policyholder can then use the benefit amount to help pay the medical or hospitalisation bills, take care of the expenses in case of a job loss due to the disability, or any other financial emergencies that may arise.

What is Considered a Disability for Term Insurance Plans?

A disability in term insurance is considered when the policyholder is unable to perform his/her job because of some limitation in the functioning of a body part. The definition of disability may vary for different insurers, but generally the following conditions are considered a disability in term insurance:

• Loss of use of a leg

• Loss of use of one or both hands

• Loss of vision in which you are not able to see with your eyes (blindness)

• Loss of hearing, i.e., inability to listen

• Loss of speech – unable to speak because of injury to the vocal cords

The disability should have persisted without any pause for 6 months

What Conditions are Covered Under Life Disability Insurance?

Disability cover in a term plan with rider benefits covers physical disabilities that involve the dismemberment of arms, hands, legs, hearing, and vision. Additionally, the physical disability does not need to start instantly after the accident. Some insurers provide a time of 180 days from the accident date, at the time you can claim the rider for disability because of an accident.

Exclusions

Insurers provide various exceptions to the ATPD rider benefit. You cannot claim the accidental rider if you suffered from disability because of the following reasons:

• If there are any signs of disability before or at the time of purchasing the term insurance

• The benefit is withdrawn if the life assured is diagnosed with a disability due to self-harm or injury or under the impact of narcotics or alcohol.

• The benefits are also revoked when such disability arises due to civil commotion, riots, war, rebellion, hunting, invasion, mountaineering, racing, steep clashing, bungee jumping, scuba diving, river rafting, paragliding, or other adventurous hobbies or sports.

• Individuals employed in the para-military, armed forces, aeronautics, security agency, and flying are also not offered under this benefit.

• In case the disability arises from any type of activity that is dangerous like attempting theft.

Why Should You add Disability Rider To Your Term Insurance Plan?

A term insurance plan is pure protection cover. This is one such plan that provides adequate protection at low premium rates. Adding disability coverage to a term plan means that you can add a large benefit amount without impacting the premium rates.

Let’s understand this with the help of an example:

You can add disability benefits up to Rs. 25 Lakhs to your 1 Crore term insurance policy. However, this benefit cannot increase the base life coverage of the primary plan.

So, add disability coverage to your term insurance plan so that you can receive:

• Sufficient financial support in case of an unfortunate event

• The cost of cover remains low

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.

What are the Different Term Insurance Riders?

There are several term insurance riders that can be added to the base term insurance to enhance its coverage. These benefits are available at an additional premium payable along with the base premium. The following riders are available with term insurance plans:

• Critical Illness Rider Benefit

• Accidental Death Benefit Rider

• Terminal Illness Rider Benefit

• Waiver of Premium Benefit Rider

• Accidental Total and Permanent Disability Rider 

• Hospicare Rider Benefit 

Features of a Disability Cover in a Term Insurance Plan

Now you know what is a disability cover and how can this help you, let’s take a look at the features and benefits of a disability cover.

• Financial Protection: A disability coverage should make sure that the basic sum assured that comes along with the base plan will be paid to your family in case you pass away within the policy term. So, the disability rider benefit doesn’t lead to the cancellation of the death payout.

• Waiver of Premium: This is another term rider in term insurance. In this, insurers waive the premium amount if the policyholder suffers from permanent disability due to an accident. This means that if the policyholder is not required to pay the future premium and all the benefits would continue to remain active. With this option, the financial stress on you or your family reduces while paying premiums if you have no income source.

Wrapping It Up!

As discussed, a term plan can be enhanced to provide coverage against disability. In order to do this, you are required to choose the accidental permanent total disability or partial disability rider benefit by paying a minimal additional cost and getting yourself additional security.

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.