Major medical emergencies leave the patients dependent on others and also causes financial losses. Health insurance plans cover the medical expenses but do not cover the income loss of the insured during the disability period. To protect against the income loss in the event of injury or illness, one should consider purchasing disability insurance that provides income in the absence of the working income. This policy is also known as income replacement insurance or disability income insurance. Disability insurance is very important and provides many benefits as well as financial protection against the loss of one’s ability to earn income due to an injury or illness.
Disability insurance provides short term or long term coverage protection to the insured and can also provide monthly income to the policyholder who is suffering losses due to disability. Short-term coverage includes short elimination period and the benefits last for 6 months to 2 years whereas long-term coverage has longer elimination period and provides benefits for several years. There is an option for lifetime benefit with which the insured can increase the coverage up to his lifetime. The premium will be high for long benefit periods.
There are other benefits that can be helpful to policy seekers such as rehabilitation benefits which provides vocational training for preparing for a new job after the end of disability period. There is another optional benefit known as 'Cost-of-living' benefit which provides increases the benefits annually to keep up with the rising inflation.
In the event of permanent disability, if the policy has waiver of premium benefit, full refund of all the premiums is paid to the insurer. An AD&D rider pays lump-sum benefits to the beneficiary of the policyholder in cease of his death. In case of loss of two or more limbs and/or eyesight, AD&D disability benefit pays periodic payments to the insured.
While purchasing disability insurance, it is necessary to consider the premium affordability and the coverage needed. There must be a balance between the two which one must consider.
