Beyond Life And Health: The Case For Disability Insurance

Life insurance provides protection in case of someone's untimely demise. But it does not pay anything in case of disability.

“So, life insurance answers what happens to the family after you are gone. Health insurance takes care of hospital bills. But neither addresses a very real scenario—what happens if you are alive but unable to earn for an extended period?” says Sarita Joshi, head of life & health insurance, Probus. This is where disability insurance comes in.

Why Disability Insurance Is Ignored 

Disability insurance remains largely ignored in India due to low awareness of the financial impact of income loss caused by disability, as most people associate insurance primarily with hospitalisation or death benefits. Many customers assume that health or life insurance adequately covers disability risks, even though these policies do not provide long-term income replacement.

“Disability is seen as an unlikely event, leading people to underestimate the risk. In addition, disability cover has historically limited visibility, often being offered only as a rider or add-on rather than a standalone solution. Affordability concerns and competing priorities also lead consumers to focus on health, life, or motor insurance instead,” says G. Srinivasan, MD and CEO, Galaxy Health Insurance.

Protection gaps are particularly significant among self-employed and informal workers, who often lack employer-provided coverage. Greater product innovation, especially embedding disability protection within broader health insurance solutions, can help improve awareness, accessibility, and adoption. Integrating disability protection into health insurance products can improve awareness, access, and adoption.

Evolving Disability Insurance Products In India 

Existing disability insurance products in India are evolving, but there is room for improvement in adequacy, accessibility, and ease of claims. While traditional offerings have been limited, newer products such as inclusive health insurance solutions designed for persons with disabilities are helping address important gaps.

Clearly stated coverage terms, standardized benefit structures, and transparent policy conditions can support a smoother claims experience. However, broader adoption will require continued focus on simpler products, wider distribution, stronger awareness, and claims processes that are easy for customers to understand and navigate.

“Irdai has a disability product that breaks barriers in health insurance coverage, offering financial security and medical assistance to those who need it the most. The explicit inclusion of HIV/AIDS (including a lump sum benefit for low CD4 counts) and pre-existing disabilities is a major shift toward adequacy. Modern treatments like robotic surgeries and stem cell therapy (up to 50 per cent sum insured) are covered,” says Srinivasan.

This is a step forward to cover the disability and HIV coverage in India, meaning it functions more as a "safety net" than a "total cost" solution, which is a mandatory product to be offered by all health insurers designed by Irdai. All health insurance products will also cover disabled persons.

When Income Stops, Risk Starts

“Think of real situations—a construction contractor with a spinal injury, a school teacher dealing with a serious illness, or a consultant facing a cardiac event in their forties. Recovery may happen, but the income disruption in the interim can create financial strain that a one-time health claim cannot fully address,” says Joshi.

Bringing income protection into the core financial plan—ideally early in one’s earning years, when premiums are lower—changes how financial resilience is built. It is not about being pessimistic. “It is about recognising that protecting your ability to earn is just as important as protecting your life or your health,” says Joshi.