Probably more feared than death by most, disability leads not only to death of income but also added medical expenses. A good disability insurance policy can take care of the “death of income” while the medical expenses will have to be covered by medical insurance…
The objective of this insurance is to pay a purchased sum of money each month to a person who is not able to work at his own job, or a job for which he is capable of doing by reason of his education, qualification and experience. The event insured against is called total disability and it is important to know the way it is defined. You can purchase the period of income replacement, e.g. two years, five years, up to age 55, etc.
This is an income protection policy and does not have any cash back if there is no claim.
From the financial planning viewpoint, it is important to have a disability income policy to ensure that a breadwinner’s disability does not cripple the family as well.
There is a similarity with term insurance in the sense that there is no cash back, but the key difference is the definition of disability.
The total and permanent disability definition in life insurance including term insurance is stricter than the total disability being covered by disability income policies.
Read more : Disability Income