Life is uncertain and all of us are vulnerable to several untoward situations that can lead to permanent disability. Any disability has the potential to terminate sources of income and cause immense financial hardships for self as well as the family.

According to the Council for Disability Awareness, around 25% of the adults have a chance of becoming disabled due to diseases or accidents before they retire.[1] This is where long-term disability insurance comes to the rescue.

How Does Long-Term Disability Insurance Work?

Most long-term disability insurance plans substitute a fraction of your income after you are afflicted with a serious injury causing permanent disability. These plans help you to manage your monetary obligations and maintain your current lifestyle even after you lose your source of income due to disability. Many a time, these plans pay 50-70% of the salary of the affected.

Benefits Of Long-Term Disability Insurance

A disability insurance plan offers the following advantages:

  • Monthly dividends
  • Most long-term disability insurance policies offer monthly payments to the insured. Some provide benefits until the policyholder attains the age of 75 or more.

  • Offers a sense of security
  • A disability insurance plan instils a sense of security to disabled people. Henceforth, it helps in restoring confidence level of the affected individual.

  • Incentives for rehabilitation:
  • There are certain injuries and medical conditions which cause disability and require institutionalised rehabilitation for recovery. Under such situations, disability insurance proves to be of great help.

  • Includes essential living expenses
  • Since disabilities can render a person incapable of work, disability insurance helps in meeting the daily living expenses. Some plans can also go to the extent of paying back a mortgage or loan
Important Factors To Be Considered

The following factors should be analysed carefully before purchasing a disability insurance policy:

  • Read the clauses:
  • Many disability plans have overlapping similarities and it is very necessary to peruse the fine print to find out the minor differences. The differences are mainly about the coverage and sum insured percentage. Therefore, reading these clauses can actually make a big difference while filing a claim.

  • Check the coverage amount:
  • Age, income, gender, number of family members etc. are important sub-factors that should be checked before deciding the coverage amount. Estimate your financial needs and then select the coverage amount accordingly.

  • Compare plans:
  • Since many insurance companies provide similar long-term disability insurance plans, it would be prudent to compare plans, list the pros and cons and then take the decision to purchase one.

  • Type of plan:
  • A disability insurance plan can be of many types. If you happen to be a single person with no dependents, then opting for a standalone plan would be more appropriate. In case you have a family where you have dependent parents, spouse and children, then opting for family plans would be preferable.
Long-term disability insurance virtually acts as life support and is very useful for people afflicted with permanent disability. It is also one of the most effective ways to deal with life after a tragic accident.

Learn more about different Health Insurance Plans here.


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.

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