If you needed to keep your life insurance policy in force, and became chronically ill and couldn’t afford the premiums, what would you do?
Or, what if you were injured on your job and couldn’t work anymore, and you know that your life insurance coverage will be especially vital to your family, how would you be able to afford the premium?
Sadly, in many instances, you would have no option but to cancel your policy and lose this valuable financial protection for your family.
Well, the good news is that there is an insurance rider that you can purchase as an add-on to your existing policy so you wouldn’t be faced with this type of situation. It’s called a ‘Waiver of Premium Rider’.
What is a Waiver of Premium Rider?
This is an extra form of life insurance coverage which you can purchase which guarantees that your life insurance premium will be continued to be paid should you become disabled, and can’t afford to continue paying your life insurance premiums.
A waiver of premium rider isn’t really that expensive to buy and only cost a few cents per thousand dollars of coverage, so it’s definitely a worthwhile investment.
If you meet the disability qualifications of the life insurance company, than you will be able to waive payment of your life insurance premiums so that your family will still be covered. The disability qualifications may vary from company to company, and there are some restrictions.
What Restrictions Apply?
In most instances, you will have to have met the disability qualifications of your insurance company, and have been disabled for at least 3 to 6 months before the rider kicks in so you can begin to waive further premium payments.
Most companies will refund the premiums you have paid during this waiting period.
Your level of disability may vary from company to company. You may receive coverage from some companies for up to 2 years if you cannot return to your current form of occupation. However, many companies state that that after 2 years, you must be disabled from returning to ‘any occupation’ to continue the waiver of premium. This generally means you must be essentially totally disabled.
To take this one step further, even if you worked in a physically demanding job or one that was sedentary such as an engineer, and if you could still work as a store clerk or in some other capacity, you may not necessary continue to qualify for the waiver of premium rider. Not all insurance companies adopt this rule as some only consider you as having to be disabled from your current occupation. You should always clarify this point with your insurance agent so you don’t get caught out.
Also, many companies have an age restriction included as well. You generally cannot purchase this rider after a certain age such as age 55, 60 or age 65 (depending on the company). In addition, many companies also have an age limitation where they will no longer continue to waive the premiums after you have reached a certain birthday. Again, this is generally either age 60 or age 65.
There are also certain other exclusions which may apply such as:
- Disability which has been caused by a pre-existing condition.
- Disability which has been caused by an act of war.
- Disability which has been caused by an injury which was self-inflicted.
Will you Pay More Premiums if you have a High Risk Occupation?
Generally speaking the answer is no. Unlike disability insurance where a coal miner would have to pay a substantially higher premium for disability insurance than an accountant, the type of occupation doesn’t rally matter when it comes to a waiver of premium rider.
What Happens if My Health Improves?
If you no longer meet the disability requirements of your life insurance company, you will then become responsible to meet the premium requirements. If this happens and your situation changes, you will of course be notified in writing by the insurance company.
What Insurance Policies Include a Waiver of Premium Rider?
It doesn’t matter what type of insurance policy you have whether it be term insurance or a permanent policy. You can purchase this rider for either form of life insurance. However, if you have a term policy, the waiver of premium only lasts for the duration of the term you have purchased, or to certain defined age such as turning 65, whichever occurs first.
Proof of Disability
You may also have to prove you are disabled before you qualify, and you may also be required to provide medical affirmation from time to time to prove that you continue to be disabled to continue qualifying for the waiver of premium.
If you need to keep your life insurance in place so you can continue providing protection to your loved ones, than buying a waiver of premium can give you an added peace of mind if you become disabled and can no longer afford the premiums. Please give me a call and I will be happy to answer any questions you have for this form of life insurance rider.*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.