Waiver of Premium Riders: Keeping Coverage If You Become Disabled
A waiver of premium rider keeps a life or disability policy in force without premium payments if you become disabled and can't work. Here is how it works, its definitions, and when it's worth the cost.
A waiver of premium rider waives your premium payments if you become disabled under the policy's definition, keeping the coverage in force. It's commonly offered on life insurance policies and built into many disability policies.
How it typically works
- Disability begins. Under the rider's definition of total disability.
- Waiting period. Often several months of continuous disability; premiums are usually paid during this time.
- Claim approved. Medical proof is required.
- Premiums waived. Coverage continues; some riders refund premiums paid during the waiting period.
- Ongoing proof. Insurer may require periodic evidence that disability continues.
Key definitions
- Total disability: often the inability to work in your own occupation for an initial period, then any occupation you're reasonably suited for. Definitions vary; see disability insurance explained.
- Waiting period: commonly six months for life insurance riders.
- Age limits: riders usually must be purchased before a certain age and may stop covering new disabilities after a certain age, such as 60 or 65.
Why it matters on permanent policies
On permanent life insurance, missing premiums can cause a policy to lapse or drain cash value. A hypothetical whole life policy with a $4,000 annual premium: if a disability lasted 10 years, the rider would waive $40,000 of premiums that would otherwise have to be paid or would put the policy at risk.
Show the numbers behind this chart
| Premiums waived | |
|---|---|
| 2 years | $8,000 |
| 5 years | $20,000 |
| 10 years | $40,000 |
Is it worth it?
Consider the rider's cost, your other disability coverage, and how important it is that the policy stays in force. It tends to be most valuable on large or permanent policies, and for people without strong disability income protection elsewhere.
The takeaway
A waiver of premium rider keeps your coverage active if disability prevents you from working. Check the definition of disability, the waiting period, and the age limits, and weigh the cost against your other disability protection.
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