Does Life Insurance Term Policy Cover Disability?

Life insurance plans may not cover critical illnesses and disability depending upon the policy of the company however, add on riders that cover permanent and total disability are present in almost all of the insurance plans. The life assured offers coverage for a total and permanent disability rider caused by accident or a long term illness, the benefit of the rider can be received as a lump sum or periodical installments. The disability rider covers the medical costs and provides compensation for the income lost due to the disability.

What Is Covered Under Disability Insurance?

The insurance company offers compensation for the lost income of the life assured due to any short term disability up to a specified period of time. In case the disability is caused by an accident, the life assured receives 125% of the sum assured.  Many policies offer a waiver of premium option where the future premium payments are made by the insurance company in case of any total and permanent disability. 

What is Waiver of Premium on Disability?

Waiver of Premium is one of the key terms in disability riders. With the help of this option, the insurance company in case of an accident or disability undertakes the responsibility of paying the future premiums on your behalf. All the benefits are still payable and the policy stays in force but the life assured does not need to pay any premium. 

What Qualifies As Disability?

The terms and conditions of the policy usually define the definition of a disability according to them. However, most insurance companies define disability as the total incapability of the life assured to perform any economic activity which requires physical effort. The disability can be a total and permanent loss of both hands, both eyes, both feet, or a combination of any 2. Many insurance companies like Max Bupa

HDFC Life, ICICI Lombard, and PNB MetLife Insurance, etc provides disability insurance in India. 

Exclusions Involved in Disability Riders

There are some situations wherein the life assured do not get any rider benefit for the disability, the benefit can be held void if the disability occurs due to the following reasons: 

• Self-inflicted injuries, attempted suicide, insanity, immorality, committing any breach of the law, or being under the influence of drugs, alcohol, etc. 
• When the life insured is involved in aviation or aeronautics other than as a passenger on a licensed commercial aircraft operating on a scheduled route. 
• Due to injuries from war (whether declared or not), terrorism, invasion, hunting, mountaineering, motor racing of any kind, other dangerous hobbies or activities
•  Being on duty in military, paramilitary, security, or police organisations. 
• Nuclear Contamination whether radio-active, explosive or hazardous nature of nuclear fuel materials or property contaminated by the nuclear fuel materials or any accident arising from such nature.
• Pre-existing condition 
•  Disability directly or indirectly, wholly or partly caused due to an Acquired Immuno-Deficiency Syndrome (AIDS) or infection by any Human Immunodeficiency Virus (HIV).
• The Life Assured taking part in any strike, industrial dispute, riot, etc 
• The Life assured taking part in any criminal or illegal activity with criminal intent or committing any breach of law.

Also read 

Difference Between Accidental Death Rider and Accidental Total and Permanent Disability

Beginner’s Guide: Evaluating A Life Insurance Policy

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.