Disability Insurance Definition:
Disability Insurance is also known as Income Protection Insurance. Under this insurance insured income is protected in case of insured is disabled for longer period with no productive work. There is one more insurance type which is extremely important to consider beside health insurance. Assume that probability of temporary disabled is higher than dying during working years. In such circumstances your personal finance can be jeopardise. “Disability Insurance compensate on loss of salary” you were taking at home before disabled. There are different types of disability insurance let us understand further on this.
Types of Disability Insurance:
Disability insurance is categorised based on impact of disability like Eligibility duration to receiving benefits, How much the policy will cost, How long the benefits will last, etc. Distinctive policies offer different attributes for disability which includes:
- Short Term Disability Insurance: Short term disability Insurance type will cover disability maximum up to two years, mostly insurance companies offers pay up to six months. Check the insurance offer document for the duration of short term.
- Long Term Disability Insurance: Long Term disability Insurance type will cover disability for more extended time duration; mostly it is up to the age of 65 or until death.
These above types are further sub-divided into below categories:
- Any Occupation: Under this policy, Insured is measured as disabled if and only when he or she is unable to execute duties relating to any occupation.
- Modified Any Occupation: Under this policy, Insured is measured as disabled only when he or she is not able to perform duties related to any occupation for which you are trained, educated or possess work experience.
- Loss of Income: If insured is determined as disabled either partial or total, Under such circumstances policy holder get paid lump sum amount or equivalent monthly payment by the insurer in the event of loss of income occurred due to illness or disability.
Some of the “Disability Insurance Exclusions” are / “Disability Insurance coverage does not includes”:
- Two-year is the maximum payment duration for mental disabled or nervous disorder.
- One-year maximum duration cover by insurer for drug or alcohol abuse claims.
- Insurance cover is terminated if disability is claimed by crime suspect.
- No payment is made by insurance company if disable person claim occurred during act of war.
This is common exclusions drafted in the insurance contract by the insurer. There may be addition exclusion mentioned in the insurance contract agreement. Kindly read the document carefully before submitting or making any payments.
Factors to consider while obtaining coverage:
You can acquire inability coverage all alone or through your corporate employer. These policies are less expensive and straightforward than any individual policies. Keep a note that if you buy from employer group policies offered typically ends upon leaving organisation or termination.
Other factors which also need to be judge before acquire coverage, they are:
- Elimination Periods: End periods is the time one need to hold on before advantages are paid off by the insurer after initiation of your disability. Duration 30 days to 90 days are most prominent elimination period, however can be even longer as well. In such events insured may also have to bear some part of the loss. Remember that payments will only starts after your elimination period.
- Probation Period: It is duration where policy holder will be covered only specified conditions. This period protects insurance companies from offering policies to somebody who is already sick from illness or somebody who is already disabled.
- Guaranteed Insurability Riders: You can add guaranteed insurability rider cover with some addition in premium amount. This rider entitles to buy additional insurance on specific event dates without undergoing medical examination. It will only be based on your income statement for meeting approvals.
- Cost of Living adjustments (COLA) Rider: You can add cost of living adjustments rider with addition in premium to get benefit by certain amount yearly to compete with inflation rate. Maximum percentage is specified in the cost of living adjustments rider clause. Read it carefully before availing this rider.
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