Does Term Life Insurance Cover Disability?

While it is a known fact that a term life insurance provides protection against death, does it cover disability? Read on to find out.A term life insurance policy is specifically covered to protect an individual’s family and provide them with financial security, in the event of the policyholder’s unfortunate demise during the policy term. Just like any other insurance policy, you have to pay the premium for a given term. In return, if you pass away during the policy term due to accident or any other health reasons, the insurer will pay the death benefit (equal to the sum assured of the policy) to the nominee.The premium for term life insurance policies is calculated based on several factors, like the life expectancy, age, and health condition of the policyholder. In some cases, if the individual is older than 40 years, the insurer would require them to undergo a medical test before finalising the premium.Many term life insurance policyholders have this notion that their policy will compensate for disability caused due to an accident. However, the truth is a standard term life insurance policy does not cover disability; it only compensates for accidental death.Does that mean your term plan will render useless if you meet with an accident that causes disability? The answer is NO. You can extend the scope of your term plan coverage by purchasing an accidental disability add-on coverage.

Add-ons, which are also commonly referred to as riders, are additional coverage options that you can purchase by paying an additional premium and widen the scope of your term plan. life insurance cover disability plan can supplement your existing coverage and provide financial protection if you get involved in an accident and suffer a partial and total disability.Most insurance companies in India offer this rider, and you can get compensation as per the policy terms. It is a critical add-on if you are involved in a high-risk profession; the amount received can help your family get financial support. Apart from offering compensation, in some cases, based on your policy terms, some insurance companies waive off the future premium when the policyholder files for a disability claim.

Most insurance companies define disability as when the policyholder is rendered incapable of being employed or engaged in any occupation or work and cannot earn profit or remuneration. The clause becomes active when the policyholders suffer from permanent and total loss of hands, feet, or eyes.

Most insurance companies have exceptions to the accidental disability add-on. The disability benefit will not be applicable, if the disability is caused due to self-injury, working under the influence of alcohol, drugs or any other intoxicating substance. The benefit is also denied if the disability arises due to war, riots, hunting, or while indulging in any adventure activities like river rafting, bungee jumping, etc.

So, if you have a term life insurance plan, it is advisable to purchase a disability rider to get coverage against accidental disability. The add-on allows you to get coverage for the treatment expenses and compensates your family for the loss of income.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.