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Disease and Disability Insurance Cover for Self-Employed

21-07-2022 |

Financial planning to meet unexpected emergencies and commitments in life is essential. And, for a self-employed individual, it is of utmost importance. However, while managing a financial crisis related to any issue is difficult, handling medical costs can be arduous. It is because planning to handle medical bills on the one side and concentrating on the recovery on the other side becomes challenging. So, a prudent step to aid during a financial crisis can be a smart decision. And the disease and disability insurance cover is a suitable option in this regard. So, let us get started and understand what it means.

 


What is the Disease and Disability Insurance Cover?

A disease and disability insurance cover is a life insurance plan with an add-on rider# benefit that provides additional financial assistance in case of a critical illness or a disability based on the policy terms and conditions apart from the life cover benefit. So, term insurance for self-employed with the disability cover is an additional layer of protection.



How Does the Disease and Disability Insurance for Self-Employed Work?

The disease and disability insurance provides financial benefits based on the scenario. For example, when you purchase our Tata AIA term plan, you have the option of two riders#, the Tata AIA Non-Linked Comprehensive Health Rider(A Non-Linked, Non- Participating Individual Health rider, UIN: 110B031V02) and the Tata AIA Non-Linked Comprehensive Protection Rider(A Non-Linked, Non- Participating Individual Health rider, UIN: 110B033V02).

The Tata AIA Non-Linked Comprehensive Health Rider(A Non-Linked, Non- Participating Individual Health rider, UIN: 110B031V02) covers different illnesses and disabilities. If the self-employed person gets affected due to any disease included in the cover, they will get the payout benefit as a monthly income for 10 years, lump sum, or a combination of both. The rider# can cover some of the common major illnesses and minor injuries. In addition, the policyholder can extend the rider# protection to include their loved ones, opt for the return of the premium option to receive the premium paid as a refund on maturity, etc.,

The Tata AIA Non-Linked Comprehensive Protection Rider(A Non-Linked, Non- Participating Individual Health rider, UIN: 110B033V02)# covers major critical illnesses, terminal illnesses, accidental death or disability. The rider# offers the flexibility to receive the benefit as a combination of lump sum and fixed income for a defined period, as regular income till the survival of the partner. And in case of a total or permanent disability, the policyholder will be waived off paying future premiums throughout the policy tenure. While paying future premiums is waived, the life cover benefit will still be active.

The policyholder can avail of the rider# options during policy inception or renewal. The self-employed term insurance cost will slightly be higher considering the rider# benefits. However, it is certainly worth the benefits.



Tax* Advantages of the Disease And Disability Insurance

The disease and disability insurance for freelancers can also provide a tax* deduction and exemption benefit under Section 80C, Section 80D and Section 10(10D)of the Income Tax Act, 1961, based on the applicable terms and conditions.

  • Section 80C - The annual premium paid for the term insurance policy will qualify for a tax* deduction under Section 80C of the Income Tax Act, 1961. The maximum limit on the deduction is ₹1,50,000 annually.

  • Section 80D - Section 80D allows for a tax* deduction of upto ₹25,000 for opting for the disease and disability insurance rider#. And, if you are a senior citizen, the benefit can increase upto ₹50,000.

  • Section 10(10D) - Under Section 10(10D) of the Income Tax Act, 1961, the payout will qualify for a tax* exemption.

These tax* benefits will be subject to the changing terms and conditions of the term insurance policy. Therefore, it is important to be aware of the tax* provisions and the amendments to maximise the tax* benefits in the long term.



How Can You Avail Of The Disease And Disability Insurance Cover?



The disease and disability insurance cover is a rider# benefit available during policy inception or renewal. For example, suppose the self-employed family has a history of getting affected due to a critical illness. In that case, they can purchase the add-on rider# during policy inception to ascertain the financial benefit at any time.

They can purchase the online term insurance plan detailing the policy features and cost online. In addition, the term insurance premium calculator will help you determine the cost of the term policy with the add-on rider# based on the sum assured and the policy term.



Why Should a Self-Employed Avail of the Disease And Disability Insurance Cover?

Purchasing the add-on rider# for health benefits is important for the self-employed for the following reasons:

  • The income for the self-employed is not always consistent. Therefore, in case of a medical emergency or a treatment, the add-on rider# benefit will prove beneficial.

  • The self-employed may not have a financial benefit for the medical expenses as received by employees belonging to well-established organisations.

  • The additional fund from the term insurance policy will suffice for the increasing medical costs prevailing in the country today.


Conclusion

Securing finances to manage unexpected scenarios in life is important. Self-employed people have to be more prepared than others due to their inconsistent income. The term insurance policy and the additional rider# benefits will provide the necessary financial advantage as required.

When the policyholder is affected due to a critical illness or a disability, the term insurance policy will provide an additional fund to pay for the hospitalisation and medical expenses or waive off paying a future premium for the policy tenure without affecting the life cover benefit.

One can customise the payout based on the preferences to get some financial advantage. So, be aware of the different additional riders# available, purchase them based on the needs and affordability, and stay invested through the policy tenure!

L&C/Advt/2022/Jul/1623

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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