Should I Purchase a Policy with Disability Benefit?

Life assurance policies provide your beneficiaries with a lump sum in the event of your death. The assumption is that this money will support your family once your financial contribution has been removed from their lives. However, your death is not the only financial blow your loved ones can receive. Often, becoming disabled can leave a family with more financial constraints than a death. Therefore it may be worth considering taking out some form of disability insurance.

When the main breadwinner in the family becomes disabled, this can have a hugely negative impact on the financial situation of the family. Not only is the main earner often unable to work, but frequently another member of the family has to give up work themselves to look after them. This can place stress and strain on the family while they are undergoing an unhappy situation.

Disability life insurance offers protection if you find that you can no longer work or earn money due to disability. There are many different types of disability policies, ranging from temporary cover for short-term disability to policies which only cover major disabilities such as blindness. These policies can often be added to your life assurance premium and may be easier for some people to qualify for than others.

Qualifying for Disability Insurance

If you work in a job or trade where the risk of injury is quite high, you would probably be more likely to consider disability insurance as an important investment. However, the more risky your occupation, the more difficult it may be to qualify for the insurance in the first place. Insurance companies offer their premiums on a basis of risk, so if you have a higher risk of becoming disabled in your occupation than in other occupations, an insurer is less likely to be willing to insure you. They will see you as more likely to cost them money with a pay-out.

Even though you may not consider your job to be a lifestyle choice, this is how many insurers view it. That is why premiums for people in high-risk occupations are generally higher. Risky lifestyle choices always attract high premiums, so if you are granted disability life insurance while employed in a high-risk occupation, your premium is likely to be very expensive.

However, a cheaper way of approaching disability insurance is to take out an injury-only policy. This is cheaper than a full plan which covers both injury and illness. As long as you do not have a pre-existing disability, you can qualify for injury-only disability insurance. This will help you cover your loss of earnings while you recover from an injury which prevents you from working. This is especially useful if you are self-employed or work in a trade which depends upon your direct labour.

Critical illness cover can provide protection for most illnesses and injuries, and it can be purchased with life assurance. For example, critical illness insurance often covers stroke, which can be very debilitating. However, it is always advisable to check the details of your policy to see exactly what is covered and what is excluded.

In summary, life assurance policies with disability benefit would be most attractive to those whose jobs carry a significant risk of injury. However, it is often very difficult for these people to take out full disability insurance or get reasonable premiums for it. An injury-only policy might address some of these issues as it is cheaper and easier to apply for, but it does not cover illness. Therefore, critical illness cover may also be something to look into for full coverage.

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