Wednesday, April 8, 2009

DISABILITY INSURANCE - DO YOU HAVE IT?

While planning for our insurance needs, the importance of term insurance can never be overstated,however,there is another aspect of our lives which though equally important, does not receive enough attention. That is the threat to one's livelihood due to disability.A disability can be physical (such as paralysis, loss of limb, deafness), mental (such as depression or post-traumatic stress disorder) or intellectual (such as a learning disability). Some people are born disabled; others become disabled as a result of an accident or disease. Consider some statistics from World Bank Report :


- 750 million people in the world are disabled, according to the World Health Organization (WHO)


- 80% of disabled people live in developing countries


-10% of the population in poor countries is disabled


- 1 in every 10 children around the world copes with a disability


- Only 2–3% of disabled children in poor countries go to school
Disability can be a major cause of financial distress , especially if it were to happen to a fit and normal individual who is gainfully employed. So one needs to have an insurance plan which will protect him/her from any such eventuality. The insurance covers available in the market cover the policyholder in case of disability due to accident , disease etc. The premium charged also is not very high. These policies are sold by general as well as life insurance companies. Some of these companies offer standalone disability cover polices and some offer these as a rider on another policy. Either way it is in the interest of the policyholder.United India Insurance , the general insurance company and LIC , the life insurer, do offer such plans for individuals.
Disability insurance is most critical for younger people. The reason for that is very simple. Younger people are generally more fit and healthy and are less prone to death due to disease etc than older people. So, between death and disability, younger people are more likely to face disability due to accident/disease etc than death. Hence , its critical that they get the disability insurance cover for themselves from any good company.Another very important reason for disability insurance is the fact that in case of death the term plan will take care of the financial obligations and also provide for the life's other needs for the policyholder's dependents. But, in case of disability, the policyholder does not get the sum assured from the term plan. Now sample this: he has lost his earning capacity, he is himself dependent on others, his dependents have no one to support them, his medical care costs needs to be paid, and to make it worse he does not get any money from his term plan(because term plan payout happens on death of the policyholder).So in such a situation , if he is not insured for disability he will be in financial, social and psychological ruin.
In the end,one needs to understand that disability can be equally devastating as death. Hence, one needs to take suitable insurance cover to safeguard from any such eventuality. So finally, I recommend that to fully ensure that you stay a peaceful and worry free life buy1. A good and comprehensive term plan.2. A comprehensive disability cover.
Stay wise n stay wealthy....

2 comments:

  1. Nice writings Rajeev, I too am a big fan of investors like Rakesh J, Yogesh Chabria and Warren Bufett.

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