Here's Why You Must Invest in a Disability Insurance Plan

Life is unpredictable, we do not know what is coming for us or what our future holds. Unforeseen and unfortunate mishaps often knock on our doors, which can be both financially and emotionally draining for our loved ones and us. Therefore, it is imperative for us to be well prepared in advance so that we do not face any hassle and seamlessly achieve all our goals and dreams. Investing in an insurance policy has seen a recent rise and has become one of the ideal ways to secure your and your family's future. It secures you financially and ensures that you do not face any hassle in the future in case of an unfortunate and unforeseen mishap. One of the best insurance policies to invest in for yours and your family's financial security is a disability insurance plan.

There are various disability insurance plans available in today's time. Therefore, it is imperative for you to compare and go for a plan that is best suited for you and your family. Apart from choosing the best disability insurance plan, it is also essential to go for a life insurance company that is the best, most trusted and leading company.

Let us first understand what a disability life insurance plan is.

What is a Disability Insurance Policy?

Before you invest in a disability insurance plan, it is essential for you to know what exactly it is. In a disability insurance plan, you pay a certain premium amount to your insurance provider and in exchange, you get payments in case of an unfortunate event, resulting in policyholder’s disability. A disability insurance plan ensures that you and your family do not face any financial constraints in the future and ensure that you can seamlessly continue with your life even if your disability does not allow you to earn. In such cases where your disability does not allow you to work and earn for your family, the disability insurance plan will provide you with a certain amount in the form of monthly income so that you do not have to financially restrict yourself. With this, you do not have to worry about your monthly incomes, medical bills, expenses on basic necessities and so on.

The premiums you have to pay for disability insurance plans are generally affordable and pocket-friendly compared to other plans, making it easier for anyone to invest. Moreover, instead of investing in an entirely new policy to avail various benefits, insurance companies offer rider benefits on a disability insurance plan.

Types of Disabilities Covered

Disability insurance policies typically cover two main types of disabilities:

• Total Disability: This refers to a complete inability to perform any work in your chosen field or any occupation for which you are qualified due to illness or injury.
• Partial Disability: This refers to a situation where you can still work, but your earning capacity is significantly reduced due to a medical condition. The benefit amount received under partial disability is usually a percentage of the full benefit offered for total disability.

Factors to Consider When Choosing a Disability Insurance Policy

Choosing the right disability insurance policy involves careful consideration of several factors:

• Coverage Amount: Select a benefit amount that adequately replaces a significant portion of your income (typically 60-80%) to cover your living expenses in case of disability.
• Benefit Period: Choose a benefit period that aligns with your needs. This could be up to retirement age, a specific number of years, or even your entire lifetime.
• Definition of Disability: Carefully review the policy definition of "disability" to ensure it aligns with your expectations. Some policies might have stricter definitions than others.
• Waiting Period: This is the period between the onset of disability and when you start receiving benefits. Choose a waiting period that you can financially manage if faced with a disability.
• Exclusions: Be aware of any exclusions mentioned in the policy wording, such as pre-existing conditions or specific types of disabilities not covered.
• Renewal Options: Ensure the policy offers guaranteed renewability, meaning the insurance company cannot cancel your coverage as long as you pay the premiums.
• Premium Costs: Compare disability insurance plans from different companies to find a balance between affordability and comprehensive coverage.

Additional Considerations

• Occupation: Certain occupations with higher risks of injury or disability might require specialized disability insurance plans.
• Health History: Your pre-existing medical conditions can impact your eligibility or premium costs. Be transparent about your health during the application process.
• Group vs. Individual Plans: Employers might offer group disability insurance plans. While these are often more affordable, individual plans offer greater flexibility and customization.

Benefits of Investing in a Disability Insurance Plan

1. Financial Security to You and Your Loved Ones

Unforeseen accidents may cause a temporary or permanent disability. As a result, it may restrict you from earning for yourself and your loved ones. This may cause a financial burden on you and your family, as a result of which you might face a hassle in achieving your goals and dreams. No one wants to compromise theirs' and their loved ones' dreams, right? Investing in a disability insurance plan ensures that you and your family are financially secured. Moreover, in case of a disability, you do not have to worry about financial restrictions. The plan will provide you with a lump sum or partial amount of money to ensure that you and your family can seamlessly carry on with their lives without facing any financial constraints.

2. Tax Saving Benefits

Did you know that you can save on taxes if you invest in a disability insurance plan? The premiums you pay for the disability insurance plan are eligible for tax benefits under Section 80C of the Income Tax Act, 1961, subject to conditions mentioned therein. This is one of the key features of investing in a disability insurance plan. However, tax laws are subject to change from time to time.

3. Income Replacement Benefit

In case you face an unfortunate accident or sickness resulting in a partial or a complete disability, you might be restricted from working and earning. It might put you in a situation where you and your family might face a financial hassle. Investing in a disability insurance plan ensures that you do not face such difficult situations. If you are unable to earn, the disability insurance plan provides you with a lump sum amount of money in case of a permanent and periodic income in case of partial disability is provided. This acts as an income replacement and ensures that you and your loved ones do not face any financial restrictions while you are on your way to achieving your goals.

4. Mental Peace

Investing in a disability insurance plan lets you be at peace of mind. In case of a disability, the stress of not being able to earn for yourself and your loved ones can be daunting and worrying. Moreover, as a disability insurance plan financially secures you by providing regular monthly incomes, you do not have to be stressed regarding any financial constraint you and your family might face.