Disability Insurance: Coverage, Claim & Renewal

Updated: 14-08-2024 07:04:21 AM

Health insurance plans cover the costs incurred during the treatment of illnesses or hospitalisation. However, what if you suffer from a sudden disability, forcing you to give up your work or income? Partial disability might lead to financial losses, while permanent disabilities can result in an inability to save for the future too. To manage the outcome of such situations, you can opt for disability insurance.

What is Disability Insurance?

Disability insurance provides risk coverage for the lost income due to failure to work in case of any permanent or temporary disability. This kind of insurance helps in providing a part of your lost income along with the medical expenses, if you happened to meet with an accident that led to disability. It covers sick leave, and offers disability benefits for short and long-term periods.

Types of Disability Insurance

Short-term

• Waiting period for such plans can range from 0 to 14 days
• Benefits can be availed for a maximum of 2 years
• Injuries since birth or caused due to an accident or after long-term ailments (which can be recovered after a period) are eligible

Long-term

• Waiting period can range from weeks to even months
• Policyholder is eligible to avail the benefits for life
• Usually covers critical illnesses and injuries which might force you to discontinue your work
• Covers a wide range of mental illnesses, cancer, cardiovascular ailments, tissue rupture and similar diseases

Eligibility Criteria

While the minimum and maximum sum insured varies from insurer to insurer, the minimum and maximum age of entry is 18 years and 70 years respectively.

What Disability Insurance Covers?

A disability can happen due to various reasons. Let us understand the coverage offered by this insurance:

• A weekly benefit is offered as compensation for the lost income for short-term disabilities, up to a particular period as specified in the policy
• In case of an accident, leading to disability, the insured will receive 125% of the sum insured
• Some insurance offer a waiver of premium in their base coverage

Claim Process

In case of an eventuality, on behalf of the insured, someone from the family needs to immediately intimate the insurance company about the claim case through the customer care support. In order to process the claim for accidental permanent/partial total disability, following documents need to be submitted to the insurance company:

• Duly filled in and signed claim form
• Hospital discharge summary
• Final hospital bill
• Certificate of disability issued by a medical board
• Medical and fitness certificate with seal and stamp (In case of accidental temporary/total disability)

Time Taken to Settle Claims

On receiving the claim intimation and required documents, the insurance company will assess them and then compensate for them within 7-30 days from the date of the accident.

Exclusions

Certain conditions are usually not covered under disability insurance, also called exclusions. Let us look at sme of these cases:

• Any pre-existing medical condition
• Injuries and disabilities due to suicide attempts, war or accident and accidents
• Any disability due to incarceration

Companies Offering Disability Insurance In India

Some of the insurance companies providing disability insurance in India are:

• Max Bupa
• HDFC Life
• ICICI Lombard
• PNB MetLife Insurance

Important Aspects

It is important to understand all the little details about disability insurance so that you reap the benefits when needed. Let us look at some of the points related to disability insurance:

• An individual can choose to have a separate accident policy for a comprehensive coverage or can opt for accident cover as a rider. If you are looking for basic protection, it is advisable for an individual to opt for the nominally add-on rider option. However, one should know that rider may not cover all the benefits which a single accident cover will
• Before buying a disability insurance, an individual should know that the idea is to compensate your income, so choose a plan that provides coverage which can enable you to maintain your current lifestyle even if you cannot earn

Advantages of Buying Disability Insurance

Looking at the advantages of getting a disability insurance, it makes sense to have one. Some  of the benefits of this insurance are:

• Accident and disability of the earning member of the family can have a tremendous impact on the financials of an individual as well as the family. Having disability insurance will keep you and your family secure in case of any mishap
• If an accident leads to disability, chances are high for you to be unable to work for some time. Thus, disability insurance can can help pay for the essential expenses
• One can save tax by having disability insurance as the premium paid towards this is exempted as per Income Tax Act, 1961

FAQs

Q1. Why should I avail disability insurance?
It provides extra cover in case of unforeseeable accidents. Disability insurance will offer financial protection if you meet with an accident or illness causing a temporary or permanent disability, making you unable to work.

Q2. Can I avail disability insurance if I have an existing disability?
No, you cannot avail disability insurance if you already have a disability. In fact, it is mandatory that you submit a medical fitness report, stating you do not have any disability when you apply for a disability insurance.

Q3. How much amount should be considered for disability insurance?
The insured amount under disability insurance should be 60% of your income after tax deduction.

Q4. Does this insurance hold good only for accidents?
No, long-term disability insurance is mostly availed for illnesses.

Q5. Do I need to consider the company repute before taking this insurance from it?
Yes, otherwise a weak company might not be able to provide the claim amount when needed.