Does Term Life Insurance Cover Disability?

25-August-2021 |

Striving to protect your family from life and its unforeseen harshness is a natural instinct. To survive and thrive in today’s world, you need ample financial stability. But you also need something to secure the continuity of finances if you ever face things like death, accidents, disabilities, life-threatening diseases, and so on. Here is where term insurance and rider# insurance are of help.

Insurance, by its very definition, aims to protect you against financial loss. Term insurance is one type of insurance that aims to become a primary source of income to your family in your continued absence. But does term insurance only provide coverage against natural death? Read on to find out what else it covers.

 

Does Term Insurance Cover Permanent Disability?

The main aim of a term policy is to secure your family members (also called nominees in insurance parlance) in your absence caused by death, accidents, critical ailments, and other scenarios mentioned in the term policy. It does this by giving your loved ones a guaranteed1 and fixed death benefit payout (also called the sum assured).

However, term insurance doesn’t just cover death. Apart from natural death, a term life policy also has your back in cases where you are incapacitated and develop a physical disability due to an accident. This physical disability must be of a permanent and total nature as offline and online term plans do not cover instances of partial or temporary physical disability. Moreover, it doesn’t cover mental disability of any sort.

Tata AIA Insurance understands the devastating effects that an accident can have on your family. It can leave you incapacitated and prevent you from pursuing a job or endeavour that you love for a long time. To reduce the financial, emotional, and mental toll on your shoulders and ensure you have ample time to recover in peace, we provide comprehensive term insurance with accidental disability riders#.

The Tata AIA Life Insurance Accidental Death and Dismemberment(UIN-110B028V030 (Long-Scale) (ADDL) rider# pays an immediate rider# insurance sum assured in the event of a physical disability arising due to an accident.

Moreover, it doubles the rider# sum assured, in case you develop a disability/ injury while travelling:

 

  • As a passenger on commercially licensed public land transportation over an established route such as a bus, tram or train.

  • In an elevator car (except if the elevator gets ridden while working in mines, rigs and on construction sites) certified to carry passengers

  • As a commercial passenger on an airline on a regularly scheduled passenger trip   

 

Or if you are in a burning public building like a theatre, cinema, public auditorium, hotel, school or hospital.

 
 
What Conditions Does Disability Insurance Cover?

Disability coverage in a term life policy with riders covers physical disabilities that include the dismemberment of hands, arms, legs, vision, hearing, and the like. As long as it is a disability/ injury of a permanent and long-lasting nature and is continuous for six months.

Furthermore, the physical disability doesn't need to occur immediately after the accident. We provide a window of 180 days from the date of the accident, during which you can claim the rider# benefit for disability arising due to the accident.

There are specific limitations to claiming this rider# benefit in a term policy. You cannot claim the accidental rider# benefit if you develop the disability due to:

 

  • Any pre-existing disease or infection

  • Attempted suicide

  • Intentional self-inflicted injury

  • Acts of self-destruction, irrespective of your mental condition/ health

  • Use/ abuse of any substance, intoxicant, drug, alcohol or hallucinogen

  • Acts of foreign enemies, hostilities, war, defence, rebellion, etc.

  • Engaging in a harmful/ life-threatening activity such as kayaking, racing of any kind (other than on foot), bungee jumping, parasailing, ballooning, parachuting, skydiving, paragliding, hang gliding, mountain or rock climbing, deep-sea and any other such event

 

There are multiple other scenarios where you cannot claim accidental rider# insurance. We recommend reading the fine print, that is the term policy brochure in its entirety before you purchase one. 

 
What Diseases Automatically qualify you for permanent disability? 

Disability doesn’t only have to arise from an accident. It can also be the effect of a critical or terminal illness. By their definition, both critical and terminal illnesses pose an immediate threat to life and restrict you from engaging in day-to-day activities.

Tata AIA term insurance plans offer an inbuilt critical/ terminal illness benefit that covers several diseases that automatically qualify as a disability and make you eligible to receive the rider# benefit. These include:

 

  • Cancer

  • Heart disease

  • Kidney failure

  • Alzheimer’s disease  

  • Third-degree burns

  • Bacterial meningitis

  • End-stage liver/ lung failure, and many more

 

Tata AIA Life Insurance offers Critical Illness benefit rider that can be attached with the base policy to provide protection coverage against 40 critical health ailments and many other benefits.

 
 
How do You Receive the Term Policy Death Benefit and Disability rider# Benefit?

With most term insurance policies, you have sufficient flexibility to choose how you wish to receive the death benefit or rider# benefit amount. Usually, you have three options:

You can choose to receive the benefit payout in a one-time lump sum payout

You can choose to receive the benefit payout as regular income for the entire income period chosen that includes receiving the income up to:

 

  • The designated duration of the term policy

  • The survival of your spouse

 

You can choose to receive the benefit payout as a combination of a lump sum and regular income for the income period chosen (for a maximum of 10 years).

 
 
To sum it up:

Term insurance aims to provide holistic protection to you and your loved ones, no matter how harsh the scenario. However, to secure yourself against disabilities, accidents, and the like, you have to get riders#/ extra covers by paying some additional premium over and above the base premium required for the term policy. Ultimately, getting riders# makes sure you do not compromise and is value for your money.

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Disclaimer
  •  Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please refer to the rider brochure or contact Tata AIA Life's Insurance Advisor/ branch

  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry