What’s Your Fallback: When You Can’t Earn An Income Due To A Disability

by Vinaya HS on October 14, 2010

in Finance

Thanks for visiting Capital Advisor. I frequently update this blog to cover various topics on personal finance such as investment strategies, financial products that you should buy and ones that you really should stay away from, financial calculators, emerging themes such as early retirement and financial independence, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

Of late, I’ve been thinking quite a bit on what I’d do if the following scenario were to happen.

Suppose your ability to earn a regular income is hampered because you suffer a disability due to whatever reason (say due to an accident). How would you plan ahead and financially mitigate for this scenario? Remember, the younger you are the longer is the time frame that you’d need to plan for.

My thoughts.

  • The best solution for such a scenario would be long-term disability insuranceinsurance that, should you become disabled, replaces your income to a certain extent each month for a significant length of time. I’ve seen only one such disability insurance policy on offer in India: Tata AIG’s Secured Future Plan. As I’ve written before, the insurance payout scenario is excellent: at the highest level you get Rs 35,000 per month guaranteed for 20 years. I’m yet to go through the policy wording.

  • The other option is to opt for a regular personal accident plan which pays out a lumpsum in the event of a disability. The onus would then be on you to manage this money such that it can generate a steady income stream. I did peruse few such plans but the payout scenarios were quite complex.

What would you recommend? Are there other options that I could look at? And how have you planned for this scenario?




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

Previous post:

Next post: