What is a life insurance waiver of premium?
A waiver of premium is an in-built feature or a rider that can be added to your life insurance policy. It's designed to help you continue to pay your life insurance premiums in the event an unexpected disability forces you out of the workforce. Without a rider in place, if you were unable to keep up with your premiums your life insurance policy would typically be cancelled. Keep reading to find out more about the benefits of getting a life insurance policy with a waiver of premium clause.
- Should you include a waiver of premium in my life insurance?
- What are the disadvantages of having waiver of premium in my life insurance?
- Do you qualify for life insurance waiver of premium?
- More things you need to know about life insurance waiver of premium
- Compare life insurance with waiver of premium feature
Should you include a waiver of premium in my life insurance?
Adding a life insurance waiver of premium to your policy can be a wise decision that could save you a lot of trouble in the future. Though paying extra to have this option added to your life insurance plan might seem unappealing now, it could be the difference between ensuring whether your family’s financial position will be looked after in the future or not.
Typically, being unable to pay your premiums would result in the cancellation of your life insurance policy. However, if you were to fall ill or get injured and be unable to work, resulting in your inability to earn an income, finding the funds to pay for your life insurance premiums would become more and more difficult.
What are the disadvantages of waiver of premium?
- There is usually a six month waiting period, which means you have to be disabled for at least six months before your premiums will be waived.
- Some policies limit the amount of time you can receive the waiver.
- You’ll need to select the premium waiver at the start of your insurance contract as it cannot be added later.
- You’ll also be required to provide information from your doctor that proves your disability.
Do you qualify for life insurance waiver of premium?
In order to qualify for a life insurance waiver of premium, you must be totally disabled. Of course, the definition of what constitutes total disability is not uniform across all policies, so make sure to read policy documents closely to understand exactly what’s involved. However, disability can generally be construed to mean that you are unable to work at all.
As mentioned above, you’ll need to be continuously disabled for a certain period (usually between three and six months) before the waiver will take effect. You’ll need to become disabled before you reach a certain age, with the limit usually around the 60 or 65-year age mark, while you’ll also have to provide your insurer with evidence of your disability.
More things you need to know about life insurance waiver of premium
- Though a six-month waiting period normally applies, you won’t have to repeatedly endure this waiting period if you have a recurring disability. However, if you develop a new disability that is completely unrelated to an earlier problem, you will once again have to sit out the six-month period.
- A life insurance waiver of premium is generally available to policyholders aged between 18 and 60 years of age, though it will generally terminate when you reach your 65th birthday. If it is not an in-built feature of your policy, the cost of adding a waiver of premium rider to your life insurance will vary depending on a range of factors. These factors include the size and type of your policy, your age and how much risk you pose to an insurer.
- If you work in a high-risk profession that regularly sees you exposed to risky or hazardous situations, for example if you’re a nurse or if you work underground in a mine, it may be more difficult to attach a waiver of premium to your life insurance policy.
- Consider whether or not you need a waiver of premium on your policy. If you plan to be paying life insurance premiums for the rest of your life, this can be a very wise investment.
- Compare life insurance policies with waiver of premium feature