If you are purchasing a life insurance policy, one of the decisions you will need to make is whether to add a waiver of premium rider. A waiver of premium may be a valuable addition to your policy, depending on your needs. Our experienced agent will be happy to advise you on the various optional riders available, including waivers of premium.
Also known as a waiver of premium for disability, a waiver of premium rider is an optional addition to life insurance that can keep your policy from lapsing should you become disabled and are incapable of continuing to pay your premiums. This coverage goes into effect in cases of severe injury, permanent severe illness, or any catastrophic change that leaves you disabled. The cost of a waiver of premium rider will vary, depending on your health and likelihood of disability while the policy is in effect.
This optional life insurance rider is typically available to individuals ages 18 to 60 who have no pre-existing disabilities. You can only opt for a waiver of premium rider when you purchase your policy – it cannot be added at a later date. The cost depends on a risk assessment based on your age and health. This rider is designed to cover unforeseen risks – not those that appear likely at the time you purchase your policy.
The terms of waiver of premium riders will vary, depending on the insurer. However, there is usually a six-month waiting period before your premiums are waived. The benefits of this rider will typically end when you are no longer disabled. In cases of long-term disability, your life insurance premiums will be waived up to a certain age, for example, age 65 or 70. If your claim is approved after the waiting period has elapsed, the insurance company will reimburse you for the premium payments you made during that period.
If you make more than one claim for a recurring disability, it may be treated as a continuation, and you may not be required to meet another six-month waiting period before coverage begins again. However, if you make a second claim on a new, unrelated disability, a new waiting period will go into effect.
Each life insurance company has its own claims procedure for waivers of premium. You will need a doctor’s statement attesting to your disability to substantiate your claim. You will also need a notice of your disability from the Social Security Administration.
This rider is relatively affordable on a month-to-month basis for most people who buy life insurance. On a term life policy, a waiver of premium rider may account for roughly 15 to 25 percent of your monthly premium. However, age, occupation, lifestyle, and health history are all factored in by insurance companies in determining the cost of life insurance and riders.