Getting A Waiver Of Premium Rider: How It Helps When You Can No Longer Pay
Life insurance is meant to protect us financially and benefit our loved ones. Insurance is enforced through regular premium payments; if you stop paying, then the policy will be terminated, leaving you and your beneficiaries unprotected.
But what happens if you’re suddenly disabled and unable to pay premiums? A waiver of premium benefit may be the only way you can keep your policy in place.
But, what is a waiver of premium benefit? And what conditions need to be met before it can be used? Read on to find out the basics of this simple clause, and why you should consider adding it to your insurance coverage!
What Is A Waiver Of Premium?
A waiver of premium is a payer benefit clause or rider that an applicant can add to their life insurance policies. It comes into effect under the following scenarios:
The policyholder becomes disabled
The person paying the premiums becomes disabled
The person paying the premiums dies
If any of these events occur, the waiver of premium rider allows the life insurance policy to remain in force, even if the remaining premiums can no longer be paid.
Can I Get This Waiver With Any Life Insurance Policy?
Yes. Insurance companies typically offer this product type for all policy categories, including:
Whole life insurance
Term life insurance
Universal life insurance
Variable life insurance
How Much Of My Premium Will Be Waived?
This will depend on your chosen insurance. Whole and term life policies normally waive the entire remaining premium. However, if you are covered by universal or variable life insurance, this clause only covers the cost of insurance charges for your policy. This is because a part of your standard premium goes into investment services – the premium waiver will not cover this component.
Conditions For Adding A Waiver Of Premium Rider To Policies
Policyholders have to meet three conditions to add waiver of premium riders to their life insurance policy. Here's a quick description of each.
The Rider Must Be Added Upon Issuance Of Your Insurance Policy
An insurance company may include a waiver of premium rider automatically, but it's more likely that you have to opt-in for it with your insurance agent. Expect your monthly insurance premium payments to be more expensive if you add a waiver of premium rider at issue.
The Rider Can Be Added Only If Your Disability Occurs After Policy Issuance.
A life insurance company will not add a waiver of premium insurance policy clause if the policyholder is already disabled. These riders usually have a requirement that the policy is in force for at least a year before a waiver of premium rider can be claimed.
The Rider Can Be Added If Your Disability Happens Before The Age Of 65.
A life insurance company will most likely require that the policyholder is under the age of 65 when the disability occurs. This is because many people over the age of 65 are more likely to acquire disabilities, making it a loss for the company. Most people also retire by the age of 65, which means that the new disability likely won’t affect their income-generating ability and wouldn’t stop them from paying their regular life insurance premium.
Added Life Insurance Coverage Options For Premium Waivers
Your insurance company may offer to keep you insured despite unemployment, sudden lay-offs, or loss of work. There are also options for a "waiver of premium for payer" – a rider that applies when the policy owner (or the person paying the premiums) is not the one being insured. This is most common when the insured person is the child, and a parent is the one paying for their insurance. In cases like these, this waiver will allow the policy to stay in force, even in case of the payer's death or disability.
FAQs About A Waiver Of Premium Rider
Do I need to be totally disabled before I can avail of this benefit?
Generally, you can only get these benefits if you suffer total disability, which prevents you from working. However, some companies may offer additional terms that cover partial disability or unemployment. These will come at a higher cost, so think about it before you get insured.
What are the pros of getting this benefit?
A waiver of premium rider may add to the cost of a life insurance policy, but it can eliminate the stress of payment in the event of total disability. The insured person can then use the money they save on living expenses while still ensuring that their beneficiaries get their death benefit if they pass away.
Plus, if you become disabled, your medical condition can shorten your lifespan and increase your medical bills. By having a waiver of benefit policy in place before this happens, you can ease the financial burden on your loved ones. These riders are affordable and can help preserve your term or whole life policy – especially when you are least equipped to pay for it.
My policy doesn't have this rider. How do I get this benefit?
In case your life insurance doesn't include a waiver of benefit, talk to your agent before your policy is issued. These are very popular riders because they offer long term solutions, but they need underwriter approval and can't be added later on. If it's not offered, simply ask how much it would cost to make it part of your insurance, and under what terms you can claim the benefit.
Wesley LLC | Financial Advice For Choosing Insurance Policies
A disability waiver may add to the cost of life insurance, but it's a godsend in the event of total disability. Not every company will have the same conditions, so compare carefully before applying.
If you need help deciding which insurance company will give you the best coverage for your money, contact us! Wesley LLC can help you go over your application and policy information, so you can enjoy peace of mind with your chosen terms.