Disability Income Insurance

The disability income insurance is also known as “income protection insurance” or “income replacement insurance”. As the name implied, it is a long term disability income protection policy that will replace a certain percentage of the insured’s income if he is unable to work due to totally disabled, an accident or sickness. The insurance company will pay a monthly income to the insured person if he met terms in the disability income insurance policy.

Below are some of the common features of the disability income insurance:

1) The insured will usually receive a fixed monthly non-taxable income once he has met the insurance policy conditions.

2) You are allowed to choose the duration of the benefit period. However, do take note that the longer the period, the higher the premium that you will need to pay.

3) You can also choose the duration of the deferred period. The longer the deferred period, the lower will be the premium. The shorter deferred period will be a better option of disability insurance for self employed people.

4) If the insured person can go to work but getting a lower income, the insurance company will pay a partial disability benefit instead.

5) In the event of death of the insured during the policy period, the insured’s dependents will then receive a lump sum death benefit. E.g. $5,000

6) The disability income insurance can be purchase as a standalone insurance policy or as an added-on rider to the basic insurance.

7) The insured person is not required to pay any premium during the period where he is still receiving the benefit payout.

8.) You can also add-on an Escalation Benefit (some insurers have this benefit add-on only) to the policy. This benefit acts as a protection against inflation. For example, additional of a 3% to 5% escalation benefit per annum to cover the inflation rate. You will need to pay an additional premium.

9) Some of the insurers will also provide the Rehabilitation Expenses Benefit. The insurer will pay for the rehabilitation cost such as training courses, workplace modifications and medical device such as wheelchair, etc.

10) For this income protection insurance, you will have no restriction on the use of the cash payout to the insured person.

11) The insurer will not pay the disability benefit if the insured stay outside Singapore for a specific period. And if the insured stay outside Singapore over a certain number of days without getting approval from the insurer, the policy might be in risk for termination.

12) The disability income insurance will also be terminated if the insured do not engage any full time job for a continuous period of days.

13) This personal health insurance is usually guaranteed renewable and not cancelable by the insurer. However, if the insured have change or involved in a riskier job, the insurer is allowed to change the premium rate.

14) There is no surrender value for the disability income insurance.