Suffering a temporary or permanent disability can hurt your financial status, especially when it affects your ability to work. If you are thinking of purchasing disability insurance in India, then go through this page to learn more about it, along with its types, benefits, and other details.
What is disability insurance?
In simple terms, disability insurance is a type of policy that works as an income replacement for individuals in the event they are incapable of working due to a temporary or permanent disability. It covers a significant part of your lost income and also takes care of the associated medical expenses if your disability was caused by an accident. A disability insurance cover will help you meet your financial responsibilities and continue your present lifestyle without the need for any drastic changes.
Types of disability insurance
In India, there are mainly two types of disability insurance, both of which are categorized by their duration. These options are explained in the following:
- Short-term disability insurance-
As the name indicates, this type of policy offers disability insurance coverage for a short duration. The standard waiting period for short-term disability insurance can be around 14 days or more and its benefits are only valid for a maximum of 2 years. You can keep receiving the benefits up until you have totally recovered or have exhausted the available coverage amount within the policy duration. Things like long-term disease and injuries caused by accidents are usually covered under this type of insurance.
- Long-term disability insurance-
On the other hand, with a long-term policy individuals can receive coverage benefits for their entire life. The waiting period in this regard can range between a few weeks to several months. It generally covers severe illnesses and accidents that might require you to give up your job. Long-term disability insurance offers protection for a wide range of health conditions like cardiovascular disease, cancer, mental illness, etc.
Benefits of disability insurance
A disability insurance policy can offer you a lot of benefits and advantages. Here are some common points that you can consider:
- Financial safety net for your family-
During the time you are unable to work because of a temporary or permanent disability, your family’s finances can take a major hit due to the absence of an earning member. A disability insurance plan can financially protect you and your family under such circumstances.
- Income replacement–
If you have suffered a disability caused by an accident, then you will most likely be unable to work for some time. In this situation, accidental disability insurance can cover a part of the lost income for the time being.
- Stress-free recuperation–
Monetary problems may lead to significant financial strain, which is not ideal during recovery. Hence, by investing in a disability insurance policy, you can have a stress-free recovery process.
- Tax benefit–
According to the Income Tax Act 1961 of India, you will be eligible for certain annual tax exemptions for premiums paid against your disability insurance.
Things to consider while choosing disability insurance
Here are some points that you should consider when purchasing disability insurance:
- Coverage amount
- Types of disabilities covered
- Policy exclusions
- Residual benefits
- Premium amount
Everyone has their own set of financial obligations and covering them can become a challenge if they are no longer able to work due to a disability. This type of situation can negatively impact your and your family’s financial condition. Thus, getting disability insurance is recommended as it can cover a considerable part of your lost income and other expenses.