Assured Income during disability or death due to accident

Death as a risk has been over sold in India  in the last  one decade,by life insurance companies and  even through personal accidents covers offered by general insurance companies. However, majority of these plans focuses on risk of death and loss of income due to death. But an accident need not always result in death. Due to advancement in technologies and safety awareness, an accident very often results in some level of disability which poses a bigger financial risk for the individual and his/her family.

Personal accident covers offers you a lump sum amount at the time of death or disablement of the insured person. This lump sum amount will come useful since most families would have a loan in one form or the other - home loan, children's education loan and so on. In most cases the personal accident cover amount is used to close existing loans and to free oneself of all liabilities. It is indeed a wise move. Death or disability of the breadwinner will mean non ability to pay monthly instalments.

But usually it is seen that either the entire insurance amount or a very high percentage of it would be used to pay off the existing liabilities. This means you are left with no corpus to invest which would ensure future income that can sustain your family's needs on a regular basis. 

So, it is equally important to ensure a monthly income to your family even in your absence. There are products in the Indian market which will ensure just this.

The uniqueness of the plan we are talking about here is that though it is essentially a personal accident policy, the payment in the event of death or disability is not lump sum but spread across a period of time. This plan offers monthly income benefit in the event of death, dismemberment, permanent total disability and paralysis. Under this plan, the individual at the time of taking the cover can specify the period for which he or his family should receive a fixed monthly income. The choice of monthly benefits receivable is linked to his current salary and you can choose between the range of Rs. 10,000/- to Rs. 35,000/ per month. The period for which the monthly income is to be paid can be chosen from 5 years to 20 years.

So if you choose a monthly income cover of Rs. 30000/- for a period of 20 years, then in the event of  the death or disability of the insured, he or his family will receive a fixed income of Rs 30000/ for the next 20 years.  The sum insured in this case would be Rs. 72lakhs. This monthly income of Rs. 30000/ for the next 20 years is guaranteed.

The sum insured amount you choose will be linked to the income you are earning at the time of taking the cover. For salaried individuals the sum insured (the total of monthly income for the duration selected) can be up to 10 times your salary. For self employed individuals, the sum insured can be up to 20 times the salary. Form 16 or salary slip has to be furnished at time of policy inception. There is 24 hours, world-wide coverage under this policy. This policy is issued for one year and has to be renewed annually. The entry age is between 18-70 years.

Our recommendation is to have this plan as a secondary cover to your personal accident cover or term assurance plans. The regular personal accident plan or the term assurance plan should cover your family’s immediate liabilities (loans) while this plan would ensure a regular monthly income for your family.