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Written By

Fathima Tabasum

Reviewed By

Ashok Manwani

Term Life Insurance Plan for Disabled People in India

When you have a loved one in the family who is a person with disabilities, it lies upon you to ensure that they have a regular source of income in case of your unfortunate demise. In this regard, a term insurance policy for disabled people can be an ideal choice.

It enables your nominees to receive regular income, allowing them to cover their healthcare and other expenses without depending on an alternative source of income.

Keep reading for a comprehensive insight!

What is a Term Plan for Disabled People?

A term insurance policy for disabled people is a special life insurance plan that enables you to set a person with disabilities as the nominee. In case of your unfortunate death, they receive regular payments instead of a lump sum death benefit, which continues till the individual’s demise.

The policy tenure in this regard ranges to a maximum of 35 years, and the premium amount and sum assured are calculated based on the dependent’s age and financial requirements. You can pay the premium either via a single payment or periodically. Also, you can go for optional benefits to secure your dependent by paying a higher premium amount.

Can a Disabled Person Buy a Term Plan?

Yes, according to the Insurance Regulatory and Development Authority of India (IRDAI), disabled individuals can purchase a term plan to safeguard their families financially.

In this regard, the underwriting process is exactly the same as for other individuals, with the insurer assessing the individual’s health stats, lifestyle, mortality rate, etc., to determine the coverage and premium amount. Additionally, the company will analyse the severity of the disability, its underlying causes, and associated risks (if any).

However, for applicants with severe disabilities or disabilities that could potentially cause complications, the term plan can have higher premiums or limited coverage options.

Importance of Term Insurance for a Disabled Person

Below are the reasons why term insurance plays a vital role in securing the future of disabled persons in India:

Provides financial security for disabled dependants.
Ensures regular income for the beneficiary throughout the individual’s life.
The coverage amount can be used to cater to all types of expenses, like household, medical, debt, and more.
Enables the policyholder to make sure that the disabled dependant can easily cater to their expenses without depending upon an alternate income source.

Benefits and Features of Term Insurance For Disabled People

The features and benefits of term insurance for disabled persons are as follows:

Flexible Policy Terms

Flexible policy terms enable holders to choose a tenure that best aligns with their requirements.

Optional Add-ons and Riders

Optional add-ons and riders allow the policyholder to customise the plan’s coverage.

Tax Benefits under Section 80C

Section 80C offers deductions up to ₹1.5 Lakh for term insurance premium payments within a financial year.

Tax Exemption under Section 10(10D)

Section 10(10D) provides complete exemption on the death benefit from a term insurance plan for a disabled person.

Health Rider Deductions under Section 80D

Section 80D facilitates a maximum tax deduction of ₹25,000 (for normal) and ₹50,000 (for senior citizens) on annual premium payments for health riders or medical insurance purchased with term insurance plans.

Factors to Consider Before Buying Term Insurance for People with Disability

Here are some of the vital factors that you must keep in mind when purchasing a term insurance plan for a disabled person:

Selecting the Right Coverage Amount - When choosing the sum assured, ensure that the amount is enough to cover the dependent’s daily, medical, and other expenses. Also, you need to consider inflation, ensuring that the sum assured is enough for the beneficiary even with a significant price rise.

Example: If your family’s monthly expenses total ₹50,000, a ₹1 crore term insurance plan may cover their needs for approximately 16-20 years, factoring in inflation.

Policy Tenure and Premium Amount - Make sure the policy period fits your needs. Also, pick a premium amount you can easily afford throughout the policy without stressing your monthly budget. To find the best coverage and premium options, use a term insurance calculator for a more personalised approach.

Insurer’s Credibility - Buying a term plan for a disabled person is a long-term commitment related to the financial security of your dependent beneficiary. Thus, you must ensure that the insurer will fulfill their promise in case of your unfortunate demise during the policy tenure.

Research the insurance company’s goodwill and claim settlement ratio to do so. Also, remember to review the policy’s terms and conditions.

Eligibility Criteria of Term Insurance for Disabled Person

The eligibility criteria to purchase a term insurance policy for disabled people are as follows:

Nationality	Indian
Age	18 to 65 years
Lifestyle Habits	Smokers are liable to pay higher premiums compared to non-smokers
Medical tests	Applicant has to undergo medical tests for the insurer to assess their medical condition, family medical history and underlying complications (if any)
Income	The applicant must have a stable income source from which they can pay the insurance premiums
Severity of Disability	The insurance company will assess the severity, causes, and potential complications of the beneficiary’s disability to decide the sum assured and the premium amount

Documents Required to Buy Term Insurance for Disabled Person

When buying a term life insurance policy, you must provide several important documents. Here's a list of the key documents typically required:

Identity Proof

Age Proof

Address Proof

Income Proof

Photographs

Medical Reports

So, buying term insurance for a disabled person in India is as simple as availing a policy for any other individual. However, the coverage options, eligibility criteria, and required documents differ across insurers. Thus, check all these aspects before making your final choice.

FAQs about Term Insurance for Disabled People

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Eligibility & Application Process

Premium & Riders

Policy Features

Claims

What is term insurance for disabled persons?

Term insurance for disabled people is a special type of insurance policy that enables the policyholder to provide regular income to a disabled dependent in the event of their untimely demise.

Can people with disabilities get term insurance?

Yes, people with disabilities are eligible to apply for term insurance policies. However, based on the extent and complications related to the disability, they may have to pay a higher premium amount or settle with lesser coverage options.

How does the medical underwriting process work for disabled applicants?

In the case of disabled applicants, the medical underwriting process involves checking the applicant's health stats and family medical history, along with the severity and potential complications of the beneficiary’s disability.

Are premiums higher for disabled individuals seeking term insurance?

Yes, term insurance premiums are higher for disabled individuals. Based on the severity and complications of their disability, insurers have to take higher risks to provide coverage.

What is a waiver of premium rider?

A waiver of premium rider is an optional life insurance rider that waives off all the future premium payments of a policy under specific conditions.

Are there any government programs that offer life insurance for disabled persons?

The Niramaya Health Insurance Scheme is a government scheme that provides financial coverage to people with disabilities, covering costs related to their OPD treatments, medication, transportation, and more.

What should I look for when comparing term insurance policies as a disabled person?

You should look at the coverage amount, policy tenure, premium amount, and insurer’s credibility when comparing term plans as a disabled person. Also, you must factor in inflation to determine whether the coverage amount will be enough to cater to your loved ones’ financial requirements in the upcoming years.

Do I need to disclose all medical conditions when applying for term insurance?

Yes, you need to declare all pre-existing medical conditions and your family medical history when applying for a term policy. This enables the insurer to assess the risk associated with providing coverage to the individual and determine the sum assured and premium amount.

What types of disabilities typically face the most challenges in obtaining term insurance?

Usually, disabilities with high severity and potential complications face the most challenges when obtaining term insurance.

How can I appeal if my term insurance application is denied due to my disability?

In case your term insurance application is denied due to disability, consider knowing the policy’s terms and conditions, consult a physician, improve your health stats, and reapply for the policy after your insurer’s recommended waiting period.

Are there any tax benefits associated with term insurance for disabled individuals?

You can avail of deductions of up to ₹1.5 Lakh for term insurance premium payments within a financial year under Section 80C. Also, you can get a complete exemption on the death benefit from a term insurance plan for a disabled person under Section 10(10D).

What is the claim settlement process for term insurance policies for disabled people?

The claim settlement process for term policies for disabled people is the same as that for other individuals. However, the terms and conditions differ across insurers. So, ensure to read through the policy papers to avoid any surprises down the line.

What documents are required to buy a term insurance policy for disabled people?

The documents required to buy a term plan for disabled people are identity proof, age proof, address proof, medical certificates as proof of disability, and photographs.

How to estimate the right coverage amount for term insurance policies for disabled people?

In the case of term insurance policies for disabled people, you need to choose a coverage amount that is adequate to meet the medical, household, and other expenses of the dependent beneficiary. Also, you need to consider inflation and the resultant rise in prices of articles and treatment expenses in the upcoming years.