Meet Arjun, a hardworking and ambitious professional who always took proactive steps to secure his family’s financial future. He purchased a term insurance policy to ensure that, no matter what happens, his loved ones are secure. Unfortunately, Arjun’s life took a dramatic turn when he met with a severe car accident. The accident left him permanently disabled, making it impossible for him to return to work. Along with the physical and emotional challenges of adjusting to his new reality, Arjun faced a difficult financial situation – he could no longer afford to pay the premiums for his term insurance policy. But fortunately, Arjun had bought waiver of premium rider when he bought term insurance policy. It ensures that if you are unable to pay your premiums due to a critical illness or permanent disability, your coverage remains intact.
Read on to discover how this rider works, the various situations it covers, and how it could save you and your loved ones from financial distress in the event of an unexpected health crisis.
What Is The Waiver Of Premium Rider?
The Waiver of Premium Rider is a valuable add-on to your term insurance policy that helps ensure your coverage stays active even if you’re unable to pay the premiums due to certain unforeseen circumstances. If you become permanently disabled due to an accident or face a critical illness diagnosis, this rider ensures that your policy remains intact without requiring you to pay any further premiums.
You can add this rider to your policy as an optional benefit, providing peace of mind and financial relief during challenging times. However, do keep in mind that there’s an extra cost associated with adding this rider, as the premium amount will be higher.
It’s important to note that different insurers may have varying terms for the Waiver of Premium Rider. Some may offer the waiver only in the case of critical illness, while others may include it for accidental disabilities or both. Make sure to check the specific conditions with your insurer.
How Waiver Of Premium Benefit Works?
If life takes an unexpected twist, the Waiver of Premium Benefit acts as a vital safeguard, ensuring your term insurance policy stays active. This feature kicks in when an accident leads to permanent total disability, or if you face a critical illness diagnosis. It ensures that your coverage continues without the need for any further premium payments, offering you essential protection and financial relief during tough times. Typically, this rider applies in the following two circumstances:
1️⃣ Waiver Of Premium In Accidental Disability
If an accident results in permanent disability, this rider comes into effect. It waives all future premium payments for the remainder of the policy term, as long as the insurer is promptly notified and the necessary documentation is provided. The best part is that the policyholder remains fully covered, meaning the family will receive the full death benefit if the insured passes away during the policy term. However, certain conditions may apply – such as a requirement that the disability must last for a specific duration (typically at least 180 days) before becoming eligible for the total and permanent disability benefit.
2️⃣ Waiver Of Premium In Critical Illness
If you are diagnosed with a critical illness listed in the policy, the Waiver of Premium rider is triggered. Upon informing the insurer and completing the necessary formalities, future premiums are waived for the remainder of the policy term. The coverage stays intact, meaning that if you pass away during this period, the insurer will pay the full death benefit to the beneficiaries. However, to qualify for this rider, you need to meet certain conditions, such as you surviving for a specific duration after the diagnosis, known as the “survival period,” before the benefit kicks in.
Highlighting Features Of Waiver Of Premium Rider
👉 Premium Waiver
One of the primary advantage of this rider is that it relieves you from paying future premiums if you get diagnosed with a covered critical illness or suffer a total and permanent disability due to an accident. This effectively reduces the financial strain of maintaining the policy during challenging times.
Also, if you meet the eligibility criteria and follow the terms, the insurer will waive off all future premium payments in the event of your passing.
👉 Death Benefit Remains The Same
Even when the premium waiver is active, the death benefit remains unchanged. This ensures that your beneficiaries will receive the full payout, providing them with financial security as intended.
👉 Affordable
The Waiver of Premium Rider, although it slightly raises the cost of your term insurance, remains one of the most affordable rider options. It offers substantial benefits by enhancing your coverage and providing additional security, all without causing a significant rise in the policy’s total premium.
👉 Waiting Period Before Benefits Take Effect
Typically, there is a waiting period before the rider’s benefits kick in. This is the amount of time you must wait before they become eligible for premium waivers due to disability or illness. Be sure to review the specific terms of your policy, as the waiting period may vary depending on the insurance provider.
Exclusions
It’s crucial to understand that not every situation is covered when opting for a Waiver of Premium Rider. Below are some common exclusions that typically apply:
- Self-Inflicted Injuries: Injuries or disabilities resulting from self-harm or suicide attempts.
- Substance Abuse: Disabilities or illnesses linked to drug or alcohol abuse.
- Pre-Existing Conditions: Critical illnesses or disabilities that existed before purchasing the rider.
- Non-Compliance with Policy Terms: Failing to meet policy requirements, such as missing premium payments or not following medical obligations, could result in the loss of benefits.
- Temporary Disabilities: The rider usually applies only to total and permanent disabilities, so short-term disabilities won’t qualify for coverage.
- War, Terrorism, or Civil Unrest: Disabilities or injuries caused by war, terrorism, or civil unrest.
- Specific Exclusions by Insurer: Certain insurers may not cover particular critical illnesses or disabilities based on their terms and conditions.
The insurance documents may outline specific conditions or restrictions set by the insurer that determine when the rider does not apply. It’s essential to carefully review these terms, as exclusions can vary depending on the policy and the insurer.
Wrapping Up!
The Waiver of Premium Rider is an essential add-on that keeps your insurance active during tough times, such as a critical illness, accident, or permanent disability, ensuring continued financial protection without the stress of unpaid premiums.
And, CoverSure’s KnowYourPolicy feature is designed to give you complete visibility into your policy. Not only does it help you understand your coverage in detail, but it also highlights the available add-ons, like the Waiver of Premium Rider, ensuring that you’re equipped with all the right tools for comprehensive protection.
