Insurance ; Disability Income Insurance

Disability income insurance pays a fixed amount each month to replace the income you would lose if you are unable to work as a result of an accident or illness. The policy aims to ease your financial loss, but will not completely replace the income you earned before the accident or illness.

How is it normally sold:

  • Term
  • Whole Life Plan

Coverage:

  • Partial Disability
  • Rehabilitation
  • Optional Escalation

Points to note:

  • Employment period; your policies might require you to be employed for a certain period before qualifying for its coverage (E.g more than 30 days of employment)
  • Coverage points; it has a few tranches, mostly 2. There will be a review to see how much should be paid to you after the first 24 months.
  • Duration of Coverage; your policy wouldn’t be more than 65 unless you’re a civil servant for Mindef or MHA.
  • Escalation Option: Higher premium with higher payout
  • Occupation Category; it would be a factor that will affect your premium and you have to inform your agent (this will make it easier to claim)
  • The payout amount up to $2000/$4000/$6000
  • There are currently only three companies that sell this policy (Great Eastern / AIA / AVIVA)
  • There are serve penalties when you surrender

Average Cost (Payout amount $4000):

  • $600 -$750 Annually

Payout on policy:

  • Up to 75% of your average salary

Conclusion

The idea of having an insurance plan is to protect you from unforeseen future circumstances by contributing an insignificant amount of money in the present. If it exceeds the category of “insignificant”, you might want to pull up a statistical chart to gauge the possibility of such a situation happening to you.

Points to think about:

  • Is there a better way to ensure such a payout?
  • Medical history?
  • Future cost analysis against your “investment opportunities”

“+1 Knowledge Point”

 

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3 thoughts on “Insurance ; Disability Income Insurance

  1. Would it be cheaper using PA insurance?

    Most disabilities during working years are due to accidents, not illnesses.

    Illnesses can be covered using:
    Shield plan — pay for direct treatments;
    Life+CI — pay for loss of income+ extra living costs due to illness/disability.

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  2. Hey Sinkie I’m back with new answers!

    I’ve found out that Personal Accident payout is definitely lesser than disability insurance or TPD.

    The another major factor would be disability can also be due NOT by accidents hence you would not be covered.

    Like

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