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Best Short-Term & Long-Term Disability Insurance For The Self-Employed

A disability, short-term or long-term, can severely impact your savings and your ability to earn an income. While employees in the corporate sector enjoy group coverage schemes, insurance for the self-employed is not as simple. In this case, the best way to ensure financial stability for your family would be to invest in term insurance and add riders against disabilities.

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Disability Insurance For The Self-Employed

The self-employment spectrum is pretty big with small business owners, independent contractors, freelancers, influencers, and the list continues. For those of you falling in these categories, the need for income replacement in case of emergencies cannot be undermined. Short-term disability insurance and long-term disability insurance through term life insurance riders can help you offset this risk should any misfortune befall you. 

The best short-term disability insurance for the self-employed is one that offers a comprehensive income benefit that effectively substitutes the temporary loss of it. And the best long-term disability insurance policy is one that covers an individual for an extended period of time. In fact, there are some policies that offer coverage for a lifetime. 

Short-Term Disability Insurance

As the name indicates, short-term disability refers to those instances wherein the nature of the disability is temporary. These are also widely referred to as partial disability, however note that partial disabilities can also be permanent as well. Therefore, if you have a permanent partial disability, you might want to check out the ‘best long-term disability for the self-employed’ section. 

The insurance policies that cater to short-term disabilities, require the patient to furnish medical documents, hospital bills, treatment details, and recovery reports to be eligible to receive the benefits. 

The financial respite in these cases is limited to a certain period (mostly up to a maximum of 2 years) to replace the loss of income. Moreover, the coverage is also only up to a percentage of the sum assured under the rider. 

Read more about the best disability insurance for the self-employed

Long-Term Disability Insurance

Long-term disability insurance covers self-employed individuals against more serious injuries that lead to total or permanent disability or dismemberment. The income loss in such cases is usually fatal, especially for those with dependents. Therefore, term insurance with riders against accidental death and prolonged disability should be made a priority by self-employed individuals or independent contractors such as those engaged in heavy-duty work. 

Different types of Plans

Best Short-term & Long-Term Disability Insurance For The Self Employed

The following table highlights some of the best short-term and long-term disability insurance schemes for the self-employed. 

Term Plan Disability Cover About  Rider Sum Assured Period of Coverage
Max Life Online Term Plan Plus Permanent disability Pays out the rider sum assured or waives off future premiums.  Up to Rs. 1 Crore (subject to the annual premium of the base plan) 5-35 years
Pradhan Mantri Suraksha Bima Yojana* Partial Disability

Standalone disability insurance by the Govt. of India offered at Rs. 12 p.a. Rs. 1 Lakh Offers cover of Rs. 2 Lakh for total disability as well.  
HDFC Life Click 2 Protect 3D Plus Total / Partial disability Fixed monthly income on diagnosis Rs. 1 Lakh to no limit  10 years 
TATA AIA Sampoorna Raksha Supreme Dismemberment Percentage of the rider sum assured is paid out Sum assured chosen for the base term lan Subject to the policy term of the base plan
Kotak e-Term Plan  Permanent disability 120% of the rider sum assured is paid out for 5 years Rs. 50,000 to Rs. 50 Lakhs Till the maturity of the base plan

Key Features Of Disability Insurance For The Self Employed

The following sections describe the key features of the abovementioned best short-term disability insurance for the self-employed and the best long-term disability insurance for the self-employed.

  1. Max Life Online Term Plan Plus

    The following riders can be availed with this term plan to be insured against long-term disabilities. 

    Max Life Waiver of Premium Plus Rider

    • Disability has to be deemed permanent by a medical practitioner. 

    • Entry age can range from 18 to 65 years. 

    • It covers total loss of sight, amputation/loss of both hands, feet, etc.  

    Max Life Critical Illness and Disability Rider

    • The rider beenfit against long-term disability can be availed under the Platinum Plus and the TPD (Total and Permanent Disability) variant.

    • Rider coverage can be availed for up to 67 years, however, it cannot exceed the policy term of the base term plan. 

    • A maximum of Rs. 1 Crore can be assured under the rider. 

  2. Pradhan Mantri Suraksha Bima Yojana

    • There is no rider component attached to this plan. It is a standalone accidental disability rider. 

    • It can be annually renewed. 

    • Anybody in the age bracket of 18 to 70 years can buy this plan. 

  3. HDFC Life Click 2 Protect 3D Plus

    This term plan by HDFC Life offers long-term disability coverage through the following riders:

    HDFC Life Income Benefit on Accidental Disability

    • It offers regular monthly income on permanent & total disability. 

    • There is no waiting period. 

    • Monthly income will be equal to 1% of the sum assured. 

    HDFC Life Protect Plus Rider

    • It offers coverage against total as well as partial disability, however, it should be permanent. 

    • A monthly sum of 1% of the sum assured will be paid for 10 years. 

    • In the case of a total permanent disability, it should last for 6 consecutive years as least. 

  4. TATA AIA Sampoorna Raksha Supreme

    Tata AIA offers the following rider benefit against accidental dismemberment with its term plans:

    Accidental Death and Dismemberment (Long Scale) (ADDL) Rider

    • It offers protection against severe dismemberment arising from an accident, accidental burns, loss of hearing, sight, speech, etc. 

    • Anyone with the term plan and in the age bracket of 18 to 65 years can purchase this rider. 

    • The benefit amount is double under certain circumstances. 

  5. Kotak e-Term Plan 

    With this term plan, you can benefit against permanent disabilities through the following rider:

    Kotak Permanent Disability Benefit Rider

    • Anyone in the age bracket of 18 to 60 years can add this rider to their base term insurance plan. 

    • The nature of disability should be total and permanent, leading to a loss of income. 

    • The life assured should survive for a minimum of 120 days from the date of accident. 

Five things to know before buying Term Plan Five things to know before buying Term Plan

Short-Term Disability Insurance vs. Long-Term Disability Insurance

Criteria Short-Term Disability Insurance Long-Term Disability Insurance
Period of Cover 2-5 years Above 5 years to whole life
Coverage A fixed percent of the sum assured is paid out  Entire sum assured under the rider is paid out
Waiting Period Up to 14 days Few weeks to months
Inclusions Childbirth, injury, and partial disability from an accident Accidental permanent disability, total impairment arising out of mental disorders, cardiovascular disorders, connective tissue disorders, etc.
Income Replacement 40-70% of lost income 60-80% of lost income

* Note - The above criteria offer a wider view of features, and therefore, should not be construed as definitive.

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