Let us begin by understanding what is term insurance. Like with other insurance policies, a premium is paid for a specific term. The nominee is guaranteed a death benefit equivalent to the plan’s value in the event that the person passes away within that period due to an accident or illness.
A term insurance policy gives the policyholder’s family death benefits as well as term insurance tax benefits under Section 80C of the Income Tax Act. The tax benefit is subject to change in tax laws. Subject to other investments made by the individual, premiums up to 1.5 lakh rupees for the individual, the spouse, and the children may come under this category. Payments of the death benefit to the nominee are not subject to tax under Section 10 (10D).
The tax benefits mentioned in the article may not apply if you opt for the new tax regime since many tax exemptions and deductions have been scrapped within the new regime.
What is a term insurance rider?
Any subscriber may add term riders to an existing term insurance. At a fraction of the price of an insurance plan, this offers additional coverage on top of the current one. A term insurance rider is an addition to a policy of insurance that extends the coverage. A policy may include a number of riders, such as the accidental death benefit, the accidental complete and permanent disability benefit, the critical sickness benefit, and the waiver of premium on the disability payment.
Benefit for accidental total and permanent disability riders
This benefit is included in most term insurance policies that include disability payouts in India. In this case, the benefit is given to the subscriber if the policyholder sustains a total and permanent disability as a result of an accident. The amount guaranteed is paid in ten equal instalments. According to the policy’s provisions, a subscriber can earn 10% of the sum assured every year for the following 10 years. The insured will have a revenue stream from this for the ensuing ten years.
What constitutes a disability?
The term insurance plan with disability benefits includes a definition of disability. According to many insurers, being completely incapacitated means that the policyholder can no longer work or engage in any kind of paid or profit-making activity as a result of the injury. When a policyholder loses the ability to use both hands, feet, eyes, or any combination of the three, this clause is triggered. Six months must have passed, during which the disability was unbroken.
Exceptions to the permanent disability rider
If the policyholder sustains the handicap as a result of self-harm or while using alcohol or drugs, the payout is cancelled. Additionally, the payment is rejected when the handicap is brought on by riots, civil unrest, revolt, war (both declared and undeclared), invasion, steeplechasing, any type of racing, bungee jumping, river rafting, scuba diving, paragliding, or any other dangerous activities. The benefit is not offered to anyone who works for the military, paramilitary, security services, police, aviation, or the military.
Disability benefit rider premium waiver
This rider states that the benefits of the insurance, as outlined in the policy schedule, will continue to be in effect even after the policyholder is no longer obligated to pay all future premiums. In the case of a permanent disability rider, the above-mentioned definition of a disability and the rider’s exclusions continue to apply.
Disability for term insurance plans
When a worker is unable to do their job due to a physical limitation, this is referred to as having a disability. The following are regarded as disabilities:
- Loss of a leg’s function
- The inability to use one or both hands
- Vision loss in which you are unable to see with your eyes (blindness)
- Hearing loss, or the inability to listen
- Speech loss – the inability to communicate as a result of vocal chord damage
- The disability ought to have continued continuously for six months.
Disability coverage features in term insurance plan
Now that you are aware of what is term insurance, what disability insurance is and how it might benefit you, let’s look at its features and advantages.
Financial Protection: Disability coverage should guarantee that your family will receive the basic sum assured that is included with the base plan in the event that you die away within the policy term. Therefore, the death benefit is not terminated as a result of the disability rider benefit. Additionally, term plans include term insurance tax benefits, as discussed above.
Waiver of premium: In this case, the insurers will not charge the insured any premium if an accident results in permanent incapacity. This indicates that all benefits would continue to be active even if the policyholder is not compelled to pay the subsequent payment. If you choose this option, you or your family will experience less financial strain while still having to pay premiums.
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.