Disability Insurance ensures that the beneficiary’s earned income remains protected in the event of the beneficiary falling victim of a disability.
There are many types of disability insurances:
1. National Social Insurance Programs:
The most important disability insurance is provided by the national governments to
all its citizens in most of the developed countries. In the United Kingdom this
insurance is known as the National Insurance, whereas in the United States of
America it is known as the Social Security. The aim of this kind of national insurance
is provide insurance for the people who are either not insured or are under-insured.
The idea is to ensure that nobody slips below the poverty line due to disability.
2. Disability insurance cover by employer:
Since occupational hazards are one of the main causative agents of disability, it is only
natural that the second most important disability insurance is the insurance cover
provided by the employer to the employee .
3. Individual disability insurance policies:
The self-employed and the ones who are not covered by the employer may purchase
disability insurance from the open market. There are a number of companies in the
open market providing disability insurance. Premiums and available benefits vary from
company to company. So one has to judiciously weigh out the options before one
purchases a disability insurance.
There are two types of disability insurance in the open market:
Short term disability policy: These types of policies have a waiting period of 0-14 days and a maximum benefit period of two years.
Long term disability policy: These types of policies have a waiting period of several weeks to several months. But here the maximum benefit range from a few years to the rest of the insurer’s life.
Open market disability insurance policies have two different protection features:
Non cancelable: Here the company cannot cancel the policy except in the event of non payment of premiums. This gives the beneficiary the right to renew the policy every year without an increase in the premiums. The insurance company is also bound not to reduce the benefits offered initially.
Guaranteed renewable: Here the beneficiary has the right to renew the policy with same benefits. The company does not have the right to cancel the policy either. But here the company has the right to increase the premiums if it has been done so with all the other same policy holders.
In addition to the traditional disability policies, there are several other options like the additional purchase options, the co-ordination of benefits, the cost of living adjustment, the residual or partial disability rider, the return of premium and the waiver of premium which can also be considered while purchasing disability insurance from the open market.
The options are available to lead a dignified life in spite of becoming handicapped. It would be wise to plan for any such eventuality. However the fact remains that the choices are limited for the poorer sections of the developing and the under developed countries.
Mail this post