Disability and Insurance in India: 6 key questions

Disability and Insurance in India: 6 key questions

Scott Hamilton famously said: The only disability in life is a bad attitude! 

India houses the largest population of disabled people in the world; 26.8 Million disabled in India, as per Census 2011, that basically means every 2 out of 100 Indians are disabled. With such an astounding number of disabled people in India, almost every family is either dependent on a disabled person or is responsible for taking care of a disabled member. 

While our government has several schemes and plans for the social welfare and rehabilitation of those with different needs, there is a still a lot to be done on the subject of financial independence of the disabled people and their families.  

This article focuses on the questions I have faced from various people at several points in my insurance career. 

Are there any specific life insurance schemes in the market for disabled people?
Currently, there are investment products under life insurance available with LIC, one that covers the life of any person who has handicapped dependent(s). In this policy, the beneficiary disabled gets a lump sum on death and an annuity. Another is an endowment plan for the Handicapped. Both the products are expensive and provide fairly ordinary standard benefits.  For financial security, one may need to additionally invest in mutual funds and other instruments.  

Can disabled people buy high-risk cover products such as online term life insurance?

Like with all of us, a disabled person seeking to cover him/herself will need to justify the need to be covered for their life. As you must be aware, the foremost principle that determines the need for oneself to have insurance is the fact that the loss of your life will financially affect those dependent on you. 

What are the key points to keep in mind for the differently abled, looking to get covered?

1)    You need to prove that you provide financially for your family and will need to submit documents to establish your gainful employment and the number of dependents. 
2)    You may need to undergo a medical test, to ascertain and evaluate the risks. This will determine the premium you may need to pay for your coverage
3)    If you are disabled with mental disorders, blindness or have complete immobility you may not be able to get a cover.

What information needs to be shared by disabled proposer while insuring himself for health or life? What documentation may be required with the application forms? 

•    The proposer must declare his disabilities in detail in the proposal form. 
•    Insurers require documentation (Doctor Certificate) that certifies permanent disability to understand the degree of disability of the proposer, and the effect of the disability, that may be permanently reducing such a person's capacity to engage in gainful employment.

Are there any additional tax benefits, besides 80C, that disabled individuals get for investments in life insurance?

Disability-related tax deductions are of 2 kinds 80U and 80DD. 

Section 80 U of the Income Tax: for disabled people themselves.
It provides for lump sum deduction on the income of the disabled. This deduction amount is determined per the extent of disability as follows:
•    Person with 40% - 79% of disability - Rs. 50000 deduction 
•    A person with greater than 80% of disability - Rs. 100000 deduction.

Section 80DD of the Income Tax: for people supporting disabled family members.
The spouse, children, parents, siblings of disabled people who support them financially can claim a deduction for investments in insurance schemes for the benefit of these disabled family members under 80DD. 
•    Family member with 40% - 79% of disability - Rs. 50,000 deduction
•    The family member with greater than 80% of disability - Rs. 100,000 deduction 

What are the options available for health insurance for the disabled? 

•    Physically disabled people can get health insurance, after a medical test. However, this becomes difficult for those that are disabled due to a chronic ailment.

•    It is also rather difficult to get health insurance for severely disabled people. Permanently or totally disabled people who may be bed-ridden may be blind or with severe mental disorders are generally avoided by insurers for health or accident disability insurance 

•    Disorders that do not affect mobility and are not mental disorders, like learning or speech disability or someone with an amputated foot, are generally accepted. Insurers would ask for certificates and details to assess the risk. Medical Tests could be conducted here as well. 

•    The Niramaya Health Insurance Scheme by Govt. of India is a scheme that covers people with mental disabilities for an Rs. 1 Lakh cover at a very nominal premium. The cover includes various OPD treatments as well as treatment for pre-existing diseases from Day 1. 

India is ever changing and the insurance sector is evolving fast. However, there is still a lot to be done for the disabled and the families of the disabled in this regard. Insurance companies claim to have a major challenge in pricing disability specific products. Let’s hope the government and IRDA can come up with schemes that can resolve this current gap in the market.

The author heads health, accident & life insurance at www.coverfox.com

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