What Is a Waiver of Premium Rider?
A waiver of premium rider is an additional insurance policy that waives the cost of premiums on life insurance policies for the term of disability.
This rider must be purchased at the same time as the original policy, and it guarantees that you will not have to pay premiums during the covered period even if you are unable to work.
How Does a Waiver of Premium Rider Work?
This rider gives someone who is disabled the opportunity not to worry about premium payments while they have a disability, and it also offers insurance protection in case the disability lasts beyond the term of coverage.
The waiver deducts what would have been paid towards premiums from the stated benefit to help pay for the insurance coverage.
Restrictions of Waiver of Premium Rider
The availability of the rider depends on the state. Not all states have this rider available so be sure to check with an insurance agent before purchasing the rider.
Inability to Qualify for a Rider if You Have a Medical Issue
If you have a current medical issue, the waiver of premium rider may not be an option for you.
There are age requirements that need to be observed to qualify for a rider but this typically depends on the insurer.
In most cases, the rider must be filed prior to the policyholder’s 60th birthday and within a certain number of years from taking out the original policy.
Waiver of Premium Rider Benefits
100% Waiver of Premium
When you sign up for this rider, you will not pay any premiums during the disability period. This means that your insurance policy is still active and protecting your family even though you are unable to work.
Premiums paid for a waiver of premium rider may be tax-deductible, so you need to check with your accountant.
The benefit amount is guaranteed as long as the policyholder satisfies all terms and conditions under this rider. This includes requirements made by the insurance company.
Requirements in Filing for Waiver of Premium Rider Claim
There are specific steps that need to be followed when filing for a waiver of a premium rider claim. These requirements vary depending on the insurer but typically, these include:
In the event that the policyholder becomes disabled, a medical certificate stating the disability and its duration should be provided. The certificate should state the details of the injury or disability that has occurred to the policyholder.
This certificate needs to be provided by a licensed medical practitioner and cannot come from another person.
Proof of Loss
After a policyholder has submitted the medical certificate, in some cases, he may be asked to provide proof of loss. This proof states the amount of money that would have been spent on premiums for this type of insurance coverage.
Notice From the Social Security Administration
If the policyholder has been receiving benefits from the Social Security Administration, a notice of this should be submitted to the insurance company.
This can be used in lieu of the medical certificate depending on the insurance provider.
Rider Claim Form
The rider claim form is where you state your policy number, personal information, and the amount of money that would have been paid towards premiums.
The insured has to completely fill this out and submit to the insurance provider to make the claim.
Notice of Disability
This certificate is different from the medical certificate in that it is issued specifically for the waiver of premium rider coverage.
It states that you are unable to perform any duties with your current employer based on a doctor’s order. The notice also serves as proof that you have fulfilled all requirements for this rider.
If you’re unable to work due to an accident, injury, or even a long-term medical condition, the waiver of premium rider may be the right choice for you.
This is a rider that helps protect your income from paying premiums while you’re unable to work and provides a secure future for all those who depend on you financially.
Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.