Disability Insurance

Overview of Disability Insurance:

It is very common for people to insure their valued assets including cars, homes and health. But, not everyone insures something that is very essential for survival - the ability to earn an income by working. Apart from normal health insurance policies, a disability insurance plan is a very critical type of insurance scheme that individuals must consider having. A long - term disability can wreak havoc on your personal finances and savings if you are not wholly prepared.

A disability insurance will replace a part of your income that you were earning, if you are unable to return to work after a critical illness or injury. One important thing to note is that disability insurance is not only for disabilities caused by accidents. It also will cover you financially if you are unable to return to work in case of long term illnesses like cancer, pneumonia or heart disease.

Why is Disability Insurance important?

Many of us have a range of financial duties and obligations that we are responsible for, such as everyday household expenses, mortgage, rent or retirement savings. But, fulfilling all your financial commitments will become a distant dream if the earning member of the family loses the ability to earn because of a disability. In such cases, a disability insurance will replace a portion of your income. A duration of a disability can be either long term or short term and can render a person unable to work. Also, a disability can be caused due to a variety of causes including mental health issue, injury or a serious illness. Usually, benefits are provided on a monthly basis so the policyholder can continue meeting their regular expenses and also can maintain their standard of living.

Disability Insurance Policy Inclusions:

Here are some of the events under which a disability income is insurance might be offered.

  • The definition of total disability usually refers to “the inability to perform every and any duty of own occupation” or “the inability to carry out the substantial and material duties of occupation”.
  • A residual disability is defined as “a result of an injury or a sickness, the loss of earning equal to at least a pre mentioned percentage of pre disability earnings”.
  • Some disabilities automatically classify the insured as totally disabled. Such disabilities are also referred to as presumptive disabilities and include loss of hearing and speech, permanent blindness, total blindness, loss of two limbs etc.
  • When the insured becomes disabled, he has to wait for a defined period of time before receiving benefits from disability insurance policy. This period influences the premium amount for disability insurance, if you choose a shorter waiting period, the premium might be higher.
  • To make sure that you have an incentive to come back to work after the disability period, the insurance covers only a portion of your normal earnings.
  • Some insurers also offer a waiver of premium in their base coverage. Select insurance companies offer waiver of premium as a separate rider.

Disability Insurance Exclusions:

  • Certain illnesses or causes of accident may be excluded from the disability income insurance policy.
  • General exclusions include injuries and disabilities caused by war or accident, aircraft accidents, normal pregnancy and suicide attempts.
  • Your disability insurance might exclude a pre existing medical condition.
  • Loss of professional license or occupational certificate
  • Any period of disability during which the insured is incarcerated.

Disability Insurance Claim Process:

Given below is a general claims process for disability income insurance.

  • If the insured faces an illness or a critical injury, deeming him unfit to continue occupation as before, he must contact the insurer immediately to check if his condition is covered by the policy.
  • If the condition is covered, the insured must procure a claims form and submit it with all required documents like address proof, identity proof, occupation / business proof and a copy of illness diagnosis. Other documents might be asked for, depending on the case.
  • After all required documents are submitted, the insurance company will investigate the claim and the claim will be approved or rejected.

Disability Insurance Plan FAQs:

  1. How long will I get the disability income insurance payments?

    The insured will receive the benefit payments as long as the policy considers the insured to be disabled or till the insured reaches the maximum period of payment.

  2. Will I be able to keep my disability income insurance even if I leave my job?

    In most cases, you should be able to keep your disability insurance policy. Do enquire with your insurance provider if there is a provision for same.

  3. Is there any time limit before which I should file a disability insurance (DI) claim?

    Yes, most insurance companies have a specified time limit before which you should file a Disability Insurance Claim.

  4. How do I know what cases are excluded from my disability insurance cover?

    Read the policy document carefully to find out what cases are excluded and included under the disability cover that you have opted for, Also, you can enquire with your insurance company to find out a list of common inclusions and exclusions.

  5. Are cosmetic surgeries covered under a disability insurance policy?

    Yes, most of the disability insurance policies cover cosmetic surgeries and elective surgeries. Your physician must certify that you cannot perform your regular job duties because of the surgery.

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