Importance of Accidental Total and Permanent Disability Rider with Term Insurance

Term insurance plans are the most affordable way to secure your family in case of your untimely death. These plans secure you for a specific period of time (the policy term) in exchange for reasonable premiums. With the life cover payout, your family will be able to maintain their standard of living even in the absence of your income. To put it simply, a term plan ensures a stable future for your loved ones even in your absence, making it the best investment for anyone who wants to protect their family’s future.  

However, death is not the only eventuality that can lead to financial problems for your family. The life cover or death benefit amount is only payable when you’re gone, but what if you are indisposed due to a physical disability or illness? Serious illnesses and disabilities can also lead to a loss of income, and the additional medical expenses can further add to your family’s financial burden. A term plan alone may not be able to protect your loved ones again every single eventuality. Which is why insurance providers also offer riders alongside term insurance that can further enhance your security.  

One such rider is the Accidental Total and Permanent Disability rider. Here’s a quick breakdown of the benefits provided by this rider and how it can safeguard your family against worst case scenarios other than death.  

How Does the Accidental Total and Permanent Disability Rider Work? 

Accidents can strike at any time without warning or reason. And sometimes an accident can leave you indisposed for an extended period of time. Accidents can even cause total and permanent disabilities that completely compromise your ability to work regularly. Inability to work means that you will be unable to maintain a steady source of income for your family. This scenario can be especially problematic if you are your family’s sole breadwinner.  

This is where the accidental total and permanent disability rider can be a lifesaver. Basic term insurance covers your family when you pass away, but this additional rider also provides protection when you are unable to work due to disabilities. The main features of this rider are: 

• A Lumpsum Payout: This rider has its own coverage amount that is paid out as a lumpsum upon making a claim. If you meet with an accident that disables you during the policy term, you will receive a lumpsum payout as specified by your policy document. Your policy’s basic sum assured (aka the life cover amount) will still be available and shall be paid out only if you pass away during the policy term.  

• Waiting Period: Upon making a disability claim, you need to go through a waiting period (180 days) before you receive the payment. During this period, the insurer will investigate your claim to determine if your disability is “total and permanent”. You will only receive a payout once if the investigation proves your claim to be genuine.  

• Covering Loss of Income & Medical Expenses: Severe injuries undoubtedly lead to loss of income and piling medical expenses. The compensation you get from this rider will help you pay off your medical bills while also supporting you with your day-to-day financial needs. Achieve peace of mind by securing your family even during worst case scenarios.  

When Can You Trigger the Accidental Total and Permanent Disability Rider? 

The accidental total and permanent disability rider is triggered upon:  

• Permanent injury caused by an accident that prevents normal function.  

• Loss of a limb due to an accident.  

• Complete loss of vision in both eyes.  

• A chronic physical condition or illness that requires long-term monitoring, rehabilitation, continues indefinitely, and is likely to reoccur.  

What are the Exclusions for Accidental Total and Permanent Disability Rider? 

Even if you are permanently indisposed, Accidental Total and Permanent Disability rider will not trigger if your injuries are sustained due to any of the following conditions: 

• A failed suicide attempt that causes permanent injury.  

• Injury sustained during any criminal activity.  

• Injury sustained due to war, terrorism, invasion, act of foreign enemy, hostilities, civil war, martial law, rebellion, revolution, insurrection, military or usurper power, riot or civil commotion. 

• Not seeking medical attention after sustaining an injury.  

• If the condition already exists before inception of the policy.  

• Injuries sustained due to hazardous activities or professional sports such as racing, martial arts, hunting, parachuting, mountaineering, bungee jumping etc.  

• Injuries sustained when inebriated due to alcohol abuse or substance abuse. Only exception would be if the substance/drug was prescribed by the medical practitioner.  

• Disabilities due to critical illness or infection.  

What is the Minimum Compensation Given by the Accidental Total and Permanent Disability Rider? 

If you opt for this rider, the minimum sum assured will be at least ₹1,00,000. This amount will be paid as a lumpsum (or as per mode of payment selected by you). There is no upper limit to the sum assured for this rider. However, the rider’s cover cannot exceed the life cover amount of your term insurance plan. Generally, insurers only provide a rider sum assured that is around 30% of the life cover amount.  

Also, note that there is an age limit for the Accidental Total and Permanent Disability Rider. To avail of this optional rider, you need to be at least 18 years old. Moreover, your current age cannot exceed 65 years. So, minors and senior citizens (over 65) are ineligible for this rider.   

Conclusion 

Life is full of unexpected hurdles, but that does not mean that we cannot be prepared for them. The greatest security you can provide to your family is an assurance of stability no matter what. Life cover alone may not be able to provide that assurance, which is why riders such as the Accidental Total and Permanent Disability Rider are crucial to cover every single eventuality. Whether you are permanently injured or are unable to work due to a chronic condition, this rider ensures that your family’s day to day expenses is met even when you are unable to work. Other useful riders that you should consider include the Critical Illness Rider, which provides significant compensation if you are diagnosed with any serious/critical illness or medical condition.

FAQS 

1) What qualifies as permanent total disablement from an accident? 

Any injury that lasts over 180 days, loss of limbs, blindness, or other permanent disabilities that are likely to persist throughout your life qualify for compensation under the Accidental Total and Permanent Disability Rider.  

2) What is the age limit for the accidental total and permanent disability rider? 

The minimum age for this rider is 18 years while the maximum age is 65 years.  

3) What is the cover amount provided by the total and permanent disability rider?  

The minimum coverage amount provided by this rider is ₹1 lakh. There is no maximum coverage limit, though the amount generally does not exceed 30% of your policy’s life cover. Rider coverage will be subject to discretion of the underwriter.  

4) What is the advantage of adding a disability rider to life insurance? 

Basic life insurance can keep your family secure when you pass away but does not offer any protection when you are unable to work due to a disability. To cover every possible eventuality, you need to secure yourself against accidents as well as critical illnesses. The Accidental Total and Permanent Disability Rider ensures financial safety for your loved ones if you ever meet with an accident that severely inhibits your ability to earn a steady income.