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Add disease and disability riders to strengthen your term insurance cover

What if you end up becoming disabled at 35, but stay alive until 65? A disability rider would help in such cases.

September 30, 2021 / 10:36 AM IST

In India, often people buy term plans for saving on taxes and not because for their primary purpose – financial protection of dependents. Those with liabilities and financial dependents are advised to invest in a compressive term insurance plan with adequate coverage, so that it protects them until their retirement, at least.

Staying prepared for unfortunate events

Yes, it may be an unpleasant experience for anyone to discuss death amongst family members and friends, but then we all must accept the fact that death is a universal fact. While one may not be able to avoid death, it is always wise to stay protected against unforeseen circumstances. While staying financially prepared against death is important, it is also important to plan for disease and disability as well. All these conditions can majorly affect a family with dependents.

You must understand all these three factors in detail with respect their financial implications on your family – death, disease and disability.

The sole purpose of term life insurance is to provide the dependents of the policyholder financial assistance in case of sudden death of the policyholder. For a term life insurance plan, the customer pays a certain premium for a pre-defined term period for a chosen sum assured/coverage amount. This sum assured is paid out to the dependents of the policyholder upon his or her death. Apart from death, there are a couple of important covers that term plans provide in the form of riders/additional covers – disability and disease.


Covering other unforeseen circumstances

Why is covering disability important? If you live until 65, you will be there to take care of your family. If you pass away at the age of 35 and had a term insurance plan then, the payout from the policy would take care of your family’s financial needs. However, what if you stay alive until 65, but end up becoming disabled at 35? In such scenarios, the disability rider is what comes to your rescue and pays a lump-sum amount that can be used to take care of your family’s financial needs to the extent feasible.

On the other hand, a critical illness/disease affects the financial future of one’s family in many ways. Probably three months of leave without pay, followed by shifting to a lower stress job profile that has a limited growth path. Moreover, for those who do not have health insurance coverage, poor healthcare facilities in case of an ailment can even lead to death or disability. And, the cost of these riders or additional covers are very economical when compared to certain standalone plans. Thus, purchasing a term plan offering critical illness benefits is strongly suggested.

You must buy a term plan at the earliest, with many prominent studies warning about a possible third wave. During the past waves, the process of physical medicals became slow, due to which the entire process of issuing term insurance was delayed. Usually, a term insurance is issued in 4-5 days. However, during the earlier waves, the process took approximately 8-10 days. And if someone gets affected due to COVID, he or she may have to wait for up to three months to be eligible for a term insurance plan which, is a much larger risk to take. To avoid such a situation, it is advisable to buy a term plan at the earliest.
Sajja Praveen is Head-Term Life Insurance,
first published: Sep 30, 2021 10:36 am
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