What is a Waiver of Premium Rider?
A Waiver of Premium Rider is an additional provision that can be attached to a life insurance policy, allowing the policyholder to stop paying premiums in the event of a disability. In essence, if the insured becomes totally disabled and unable to work, this rider waives the requirement to make premium payments while the policy remains in force.
Key Features
- Disability Definition: The specific conditions under which the waiver applies, often defined in the policy.
- Waiting Period: Typically, there is a grace period, usually ranging from 6 to 12 months, before the waiver takes effect.
- Coverage Duration: The waiver usually remains in effect until the insured reaches a certain age or recovers from the disability.
Benefits
The primary benefit of a Waiver of Premium Rider is that it ensures continued life insurance coverage even when the policyholder cannot work and generate income. This can provide significant peace of mind for the insured and their beneficiaries.
Considerations
It's essential to review the terms and conditions of the rider, as definitions of disability, waiting periods, and coverage limits can vary. Additionally, while this rider is beneficial, it may increase the overall cost of the insurance policy.