Does Term Life Insurance Cover Disability

Insurance, by its very definition, aims to protect you against financial loss. Term insurance is one type of insurance that aims to become a primary source of income to your family in your continued absence. But does term insurance only provide coverage against natural death? Read on to find out what else it covers.

Does Term Insurance Cover Permanent Disability?

The main aim of a term policy is to secure your family members (also called nominees in insurance parlance) in your absence caused by death, accidents, critical ailments, and other scenarios mentioned in the term policy. It does this by giving your loved ones a guaranteed1 and fixed death benefit payout (also called the sum assured).

However, term insurance doesn’t just cover death. Apart from natural death, a term life policy also has your back in cases where you are incapacitated and develop a physical disability due to an accident. This physical disability must be of a permanent and total nature as offline and online term plans do not cover instances of partial or temporary physical disability. Moreover, it doesn’t cover mental disability of any sort.

What Conditions Does Disability Insurance Cover?

Disability coverage in a term life policy with riders covers physical disabilities that include the dismemberment of hands, arms, legs, vision, hearing, and the like. As long as it is a disability/ injury of a permanent and long-lasting nature and is continuous for six months.

Furthermore, the physical disability doesn't need to occur immediately after the accident. We provide a window of 180 days from the date of the accident, during which you can claim the rider# benefit for disability arising due to the accident.

There are specific limitations to claiming this rider benefit in a term policy. You cannot claim the accidental rider# benefit if you develop the disability due to:

• Any pre-existing disease or infection
• Attempted suicide
• Intentional self-inflicted injury
• Acts of self-destruction, irrespective of your mental condition/ health
• Use/ abuse of any substance, intoxicant, drug, alcohol or hallucinogen
• Acts of foreign enemies, hostilities, war, defence, rebellion, etc.
• Engaging in a harmful/ life-threatening activity such as kayaking, racing of any kind (other than on foot), bungee jumping, parasailing, ballooning, parachuting, skydiving, paragliding, hang gliding, mountain or rock climbing, deep-sea and any other such event.

There are multiple other scenarios where you cannot claim accidental rider# insurance. We recommend reading the fine print, that is the term policy brochure in its entirety before you purchase one. 

What Diseases Automatically Qualify You For Permanent Disability? 

Disability doesn’t only have to arise from an accident. It can also be the effect of a critical or terminal illness. By their definition, both critical and terminal illnesses pose an immediate threat to life and restrict you from engaging in day-to-day activities.

How Do You Receive the Term Policy Death Benefit and Disability Rider Benefit?

With most term insurance policies, you have sufficient flexibility to choose how you wish to receive the death benefit or rider# benefit amount. Usually, you have three options:

• You can choose to receive the benefit payout in a one-time lump sum payout
• You can choose to receive the benefit payout as regular income for the entire income period chosen that includes receiving the income up to:
       The designated duration of the term policy
       The survival of your spouse
• You can choose to receive the benefit payout as a combination of a lump sum and regular income for the income period chosen (for a maximum of 10 years).

Conclusion

Term insurance aims to provide holistic protection to you and your loved ones, no matter how harsh the scenario. However, to secure yourself against disabilities, accidents, and the like, you have to get riders#/ extra covers by paying some additional premium over and above the base premium required for the term policy. Ultimately, getting riders# makes sure you do not compromise and is value for your money.

Also Read: How To Change The Nominee On A Term Insurance Policy

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