Go for disability insurance, secure future

Sameer Bansal

We all have a plan. We plan for our marriage, children’s education, buying a house, retirement, among others. But guess what, life is unpredictable and unforeseen events can make the most best-laid plans awry. Hence, it is important to prepare as best as we can for whatever life may bring. Insurance is one of the ways to prepare for financial unpredictability in life.

According to a WHO report dated April 2016, one billion people, or 15 per cent of the world’s population, largely from developing countries, experience some form of disability. One-fifth of the estimated global figure — approximately between 110 million and 190 million people — experience significant disabilities.

Ensuring the financial wellbeing of one’s family in case of any eventuality has become a top priority today. While you may be covered by health insurance, there is also a need to be covered for disabilities. An unforeseen accident or a stroke can leave you dependent for life. Disability insurance can help replace a portion of your income if injury or illness renders you unable to work.

Here are the key reasons why you should consider disability insurance:

1. If you or others depend on your income — you need it.

If you have liabilities or other people depend on your income then you need to consider disability insurance. The loss of income during this period could deplete your savings and have a significant impact on your finances.

2. Disability insurance replaces a portion of your income when you can’t work.

If you were unable to work due to illness or injury, disability insurance can help to pay your most essential expenses, including food, utilities, school fees, rents and car payments.

3. The risk of disability during your working years may be greater than you think.

The risk of suffering a debilitating illness or injury is greater than you realise. In fact, an average 20 year old is more likely to become disabled than die early. Disability insurance helps you maintain a steady stream of income when you can’t work due to illness or injury.

To start with, you should check to see if disability coverage is made available to you through your employee benefits package. You might want to look carefully at coverage, since group benefits alone may not be enough due to potential benefit limitations and types of income covered. It is recommended that you top-up your health insurance policy with an accident disability benefit rider to suit your financial needs.

A good rule of thumb is to protect 60 to 80 per cent of your after-tax income. You will need to meet your essential living expenses if you become disabled. Nearly 72 per cent of expenditures cover essential needs like housing, food, transportation, health care and education. Even when budgets are tight, it still makes sense to buy enough disability insurance to cover rent or EMI payments to provide financial security to your family.

We usually tend to underestimate the chances that misfortune will come our way. But it is prudent to be prepared for any such misfortune.

The author is Director – Bancassurance, PNB MetLife. The views expressed in this article are his own.