Many of us are familiar with the idea of buying insurance to cover ourself in the event of Death, Critical Illness and Total Permanent Disability (TPD). However, what worries me is what happen if I’m not able to work and yet do not meet any of the three requirements? Who then can I rely on if I’m alone or if I’m the sole bread winner?
I believe some will ask how can that be possible?
Firstly, the scope of Critical Illness is very narrow. It usually refers to the 30 ailments. In simple terms, Critical Illness usually refer to life-threatening illness but how often in our life time does one contract such an illness? The conditions involved with TPD to cover are equally difficult to satisfy.
TPD is generally define as one of the following:
- Total and irrecoverable loss of use of two limbs at or above the wrist or ankle.
- Total and irrecoverable loss of sight in both eyes.
- Total and irrecoverable loss of sight in one eye and loss of one limb.
I read an article that actual claim statistics for TPD is usually low as one need to satisfy the stringent requirements for both ‘total’ and irrecoverable’.
However in most situations, disabilities are not permanent. Some are able to return to work after a lengthly treatment and it can be anything from months to years and in the case of a long-term disabilty, the company is not obliged to keep you on the payroll for longer than three months, based on the Ministry of Manpower. During this time, the financial burden can be enormous.
Disability Income cover is different from the usual TPD cover as it does not require disability to be permanent or total.
After an initial period which can be from 60 to 180 days, a monthly benefit is paid until the claimant can go back to work again. If in the event that the insured is unable to find a job of equivalent pay due to his disability, he will be paid the difference and if the insurer is never able to get back to work, he will be paid till the policy expiry date which can be age 55, 60 or 65.
Like most people, I have policies like accident plans that pays a weekly income in the event of an accident but this is mostly cap at one or two years. Disability from illnesses are totally excluded.
If Disability Income Insurance is so important, why are they so few people picking it up. The main reason I believe is awareness. Currently, only two insurers Aviva and Great Eastern offers this. Another reason is that underwriting for such a plan is very strict. High risk jobs e.g. SAF, Civil Defence and jobs that require a high skill set e.g. are usually excluded or have to pay a very high premium.
I have just bought a Disability Income Insurance from GE and I will be sharing some of the features of the plan.