What is the Accidental Total and Permanent Disability Rider in Term Insurance?

Term insurance is a great instrument to safeguard a family’s future in the unfortunate event of an insured’s demise. However, it only provides a death benefit and does not provide any other kind of coverage. This may leave the insured and their family vulnerable to financial duress in case there’s a loss of income in any other way than death. This is where term insurance riders come in. A rider is an additional benefit that one can add to their base plan to enhance its coverage.

In this article, we will discuss one such rider that’s extremely helpful and highly suggested - the Accidental Total and Permanent Disability Rider. Let’s delve into it:

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What is an Accidental Total and Permanent Disability (ATPD) Rider?

An Accidental Total and Permanent Disability Rider, as the name suggests, is a rider that offers a lump sum payout or monthly payouts if the insured suffers from an accident and faces total and permanent disability. The payout can either be given over and above the sum assured in the policy, or it can be deducted from the total sum assured. Apart from that, some policies may offer a waiver of premium option. Now, the definition of “total and permanent disability” varies from insurer to insurer and policy to policy. 

Cases Covered in Accidental Total and Permanent Disability (ATPD) Rider

While coverage varies across insurers, the rider typically covers:

Loss of both hands or both feet
Loss of eyesight in both eyes
Loss of one hand and one foot
Paralysis or severe neurological impairments
Permanent inability to earn a livelihood

What is the Need for Accidental Total and Permanent Disability (ATPD) Benefit Rider?

Accidents can be financially devastating. Losing the ability to work means a sudden loss of income, making it difficult to manage daily expenses, EMIs, and medical costs. Here’s why the ATPD Rider is essential:

1. Financial protection – Ensures the insured and their family have a financial backup in case of permanent disability.
2. Income replacement – Provides Income Benefit on Accidental Disability Rider, ensuring continued financial support.
3. Covers medical and rehabilitation costs – Helps manage hospitalization, physiotherapy, and long-term care expenses.
4. Debt repayment – Prevents loan defaults by offering a lump sum payout.

Note - Most critical illness riders also include disabilities mentioned in the list of their covered illnesses but if someone is looking for a separate rider with a broader scope, this makes sense.

Benefits of Accidental Total and Permanent Disability (ATPD)

The Accidental Total and Permanent Disability (ATPD) Rider offers crucial financial protection in case of a severe accident. Here’s why adding it to your term plan is beneficial:

1. Financial support: The ATPD rider provides a lump sum payout or regular income, ensuring financial stability if an accident leads to total and permanent disability.

2. Affordable premium: It comes at a low additional cost compared to standalone disability insurance, making it a budget-friendly way to enhance your coverage.

3. Easy integration: This rider can be easily added to an existing term insurance plan, offering flexibility without needing a separate policy.

4. Tax benefits: Premiums paid for the ATPD rider qualify for tax deductions under Section 80C, helping you save on taxes.

5. Income protection: By replacing lost income, this rider helps maintain your family’s standard of living, ensuring financial security despite a disability.

How to Get the Accidental Total and Permanent Disability (ATPD) Benefit Rider with Term Insurance?

Most term insurance plans offer the Accidental Disability Rider as an add-on during policy purchase. However, some insurers allow policyholders to add it later during policy renewal.

• Choose a term plan that offers the rider.
• Check the coverage amount and payout structure.
• Compare premium costs with and without the rider.
• Ensure the insurer’s definition of total and permanent disability aligns with your needs.

Documents Required to File ATPD Rider Claims

To file a claim for Total and Permanent Disability Insurance, the following documents are usually required:

• Claim form (duly filled and signed)
• Medical reports confirming disability status
• FIR (if applicable)
• Hospital discharge summary
• Policy documents
• Identity proof of the insured
• Income proof (if income-based benefits apply)

Claim Procedure For Accidental Total and Permanent Disability (ATPD) Benefit Rider

Filing a claim for the ATPD rider is a straightforward process, but it requires timely action and proper documentation. Here’s a step-by-step guide to ensure a smooth claim settlement:

1. Inform the insurer immediately – As soon as the accident occurs and results in a total and permanent disability, notify your insurer. Most insurance companies have a specific timeframe within which claims should be reported, so early intimation helps avoid any delays.
2. Submit necessary documents for verification – The insurer will require specific documents, such as a duly filled claim form, medical reports confirming the disability, an FIR (if applicable), a hospital discharge summary, identity proof, and policy documents. These are essential for claim assessment.
3. Medical evaluation by the insurer – In some cases, the insurance company may arrange for an independent medical evaluation to confirm the nature and extent of the disability. This helps determine whether the claim meets the insurer’s definition of "total and permanent disability."
4. Claim processing and payout – Once the verification is complete, the insurer will process the claim as per policy terms. The payout may be in the form of a lump sum or monthly income, depending on the rider’s benefit structure. If the policy includes a premium waiver, future premiums may also be waived.

Exclusions in the Accidental Total and Permanent Disability (ATPD) Rider

Like all insurance products, the ATPD Rider has exclusions. Common exclusions include:

•  Injuries due to self-inflicted harm or suicide attempts.
•  Disability caused by war, terrorism, or civil unrest.
•  Accidents while under the influence of alcohol or drugs where the insured is not the victim.
•  Participation in dangerous sports or illegal activities.
• Pre-existing disabilities or conditions not caused by an accident.

Best Term Plans with Accidental Total and Permanent Disability Rider

HDFC Life Click 2 Protect Super: The HDFC Life Click 2 Protect Super plan offers comprehensive financial protection through multiple rider options, covering disabilities in various ways. The Accidental Total and Permanent Disability (ATPD) Rider provides coverage for severe injuries, such as the total and irrecoverable loss of two limbs, complete loss of sight in both eyes, or a combination of limb and vision loss. It is available through the Income Benefit Rider, which ensures a steady income by paying 1% of the rider sum assured every month for 10 years in case of disability. 

Additionally, disabilities are covered under the Critical Illness (CI) Rider, which provides a lump sum payout upon diagnosis of specified conditions. The Waiver of Premium Rider further enhances protection by waiving future premiums if the insured suffers a disability or critical illness. While the Income Benefit Rider functions separately from the CI Rider, all three riders provide some form of disability coverage, ensuring financial security and peace of mind for the insured and their family.

ICICI iProtect Smart: ICICI iProtect Smart provides built-in protection against total and permanent disability (TPD) without requiring a separate disability rider. If the insured is unable to perform at least three out of six essential activities—mobility, bending, climbing, lifting, writing, or vision—the policy triggers the Waiver of Premium (WOP) benefit, ensuring that future premiums are waived while keeping the policy active. Additionally, the plan includes a Critical Illness (CI) Rider, covering 34 critical illnesses, some of which also involve disabilities. While there is no standalone disability rider, the combination of WOP on TPD and CI coverage ensures financial relief in case of a severe health crisis.

Axis Max Life Smart Term Plan Plus: Axis Max Life Smart Term Plan Plus offers multiple layers of protection for disability and critical illness. The policy allows the insured to include Total and Permanent Disability (TPD) coverage under the Critical Illness (CI) Rider, which defines disability as the inability to perform at least three out of six daily living activities—washing, dressing, transferring, mobility, toileting, and feeding. Additionally, the plan provides a Waiver of Premium (WOP) benefit on both Critical Illness (CI) and Accidental Total and Permanent Disability (ATPD), ensuring that the policy remains active without further premium payments.

Disability coverage is further strengthened through the newly launched Accidental Death and Dismemberment (ADD) Rider, which not only covers accidental death but also disabilities caused by severe accidents. The insured receives a lump sum payout in case of accidental death or permanent disability (whichever occurs first), with the payout amount determined at the policy’s inception. This multi-layered protection ensures financial security in the face of unforeseen medical emergencies and disabilities.

TATA AIA Sampoorna Raksha Promise: TATA AIA Sampoorna Raksha Promise provides coverage for Accidental Total and Permanent Disability (ATPD) with a lump sum payout upon diagnosis. The policy defines ATPD as the loss of both eyes, both arms, both hands, both legs, both feet, or any combination of one limb and one sensory loss (such as loss of sight in one eye and loss of one hand). Additionally, it includes severe conditions like removal of the entire lower jaw, provided they occur within 180 days of an accident.

The plan also offers a Waiver of Premium (WOP) benefit, ensuring that all future premiums are waived if ATPD occurs, keeping the policy in force without additional financial burden. The rider sum assured is disbursed as a lump sum, providing financial security to the insured in case of total and permanent disability.

BALIC eTouch II: BALIC eTouch II offers protection against Accidental Total and Permanent Disability (ATPD) by waiving all future premiums if the insured is diagnosed with ATPD. This ensures that the policy remains active without any financial burden on the insured. The plan also provides coverage for disabilities under the Critical Illness (CI) rider, which includes a list of 60 specified illnesses that may lead to permanent disability. This dual-layered protection safeguards the insured against unexpected disabilities while ensuring continued coverage without additional premium payments.

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Conclusion

An Accidental Total and Permanent Disability Rider is a valuable add-on that provides financial security in case of a life-altering accident. It ensures a steady income, helps manage medical expenses, and prevents financial strain on your family. Adding this rider to your term plan enhances your protection and safeguards your future. Consider including it for comprehensive coverage and peace of mind.