Some life covers waive future premiums in case of permanent disability caused by an accident and also on the diagnosis of certain critical diseases
Traditionally, we have always associated life insurance covers with security against unforeseen circumstances. They are widely considered to be a part of one’s portfolio for emergency situations, providing a lumpsum payout to the nominee in the instance of the life assured’s death.
However, more often than not, these covers cater to the needs of the family post the death of the breadwinner. What happens to the insurance cover if the breadwinner was involved in an accident and becomes permanently disabled? He survives the accident but now is unable to pay the premiums associated with the term plan, or if he/she is critically ill and can’t continue to pay premiums? Or if he is diagnosed with a terminal illness and his death is certain anyway?
In such instances the cover might lapse and with that the protection umbrella which the breadwinner had planned for his family in his absence fades away.
What if we could have a provision for those cases where the life assured doesn’t have to pay any further premiums if he is involved in an accident and becomes permanently disabled? This way at least the protection umbrella that he had made for his family, remains intact.
Similarly, with increasing risks to health due to lifestyle changes, there is a need to look at critical and terminal illnesses very seriously. A critical illness might force the breadwinner to retire from his job for a few years coupled with additional financial outflow during the treatment and recovery phase. This would again make it challenging for the life assured to pay his premiums towards the life insurance cover. On the other hand, a terminal illness cannot be cured and results in the death of the patient within a short span of time. In such a situation, it would really help if the lump sum payout is given at this stage itself.
In view of the above, life insurance companies have started launching covers that come with differential plan options to cater to the diverse needs of the people. Some of the areas that the new plans have started addressing are:
Waiving your premiums and accelerated benefits: Some life covers waive future premiums in case of permanent disability caused by an accident and also on the diagnosis of certain critical diseases. This is relieving of a major financial burden, while retaining the protection it offers, is one such highlight that will allow the family of the policyholder to be financially secure in such an unexpected situation.
Moreover, it accelerates the payout of death benefit to the family if the life assured is diagnosed with any terminal illness. This helps the family to deal with the financial stress by helping them pay medical costs associated with the terminal illness and also ensures that in the long run, the family does not have to compromise upon the dreams that the breadwinner had planned for them due to financial restraints.
Replacing your income : Think of a typical salaried person’s life in our country. He is the breadwinner for the family. The household’s expenses, his children’s education expenses are all provided for by his monthly salary. But what if fate has some other plans and an untoward incident befalls the family. Apart from the policyholder’s lifetime savings in some FDs and other instruments, there is no substitute for his monthly income. Especially if the person is a private sector employee, the family will have to face a lot of difficulties in terms of managing the day-to-day expenses. This is where a life cover comes in handy. Some term covers are now providing an option that allows the family to receive a monthly income even in the absence of the policyholder. Not only is this income provided till the end of the policy term or four years whichever is higher, but it may also increase every year, based on the income projection provided by the policyholder and the plan type chosen by him.
And along with this, the family also receives a lumpsum amount at the time of the death of the policyholder.
Such a tailor-made solution ensures that the family’s lifestyle and dreams are not compromised upon and the household will still run smoothly.
HELP IN TIME OF NEED
- Some life covers waive future premiums in case of permanent disability caused by an accident and also on the diagnosis of certain critical diseases
- This accelerates the payout of death benefit to the family if the life assured is diagnosed with any terminal illness
- Some term covers are now providing an option that allows the family to receive a monthly income even in the absence of the policyholder
- Not only is this income provided till the end of the policy term or four years whichever is higher, but it may also increase every year
The writer is vice-president –products, HDFC Life
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