What is 'Waiver Of Premium Rider'
A waiver of premium rider is a clause in an insurance policy that waives the policyholder's obligation to pay any further premiums should he become seriously ill or disabled, so the waiver of premium allows people to benefit from an insurance policy, even when they cannot work.
For an upfront charge, most insurance companies will incorporate a waiver of premium into a policy. The waiver is usually associated with life insurance policies, and requires the policyholder to be disabled for a specified amount of time, such as being incapacitated for six months, and to have a waiver of premium, some companies may also place other requirements on the policyholder, such as being healthy and below a certain age.
BREAKING DOWN 'Waiver Of Premium Rider'
A waiver of premium provision within an insurance policy may provide temporary or permanent protection should the policyholder be unable to work. This can cover times of serious injury or disability, as well as serious illness.
A waiver of premium rider is considered an optional or supplemental benefit in most cases. This means that the policyholder must choose to participate in the program and meet any and all requirements set forth by the insurance company to do so. Most commonly, a one-time fee is required to have the policy rider put in place, though monthly premiums may be required as well.
Events That Trigger the Waiver of Premium
An example of injuries that may trigger the institution of the waiver of premium rider can be an injury resulting in the ability to maintain normal functional or participate in daily activities. This can include, but is not limited to, loss of limb or vision, full or partial paralysis, or loss of hearing in cases where hearing is critical to job performance. Additionally, any injury that results in a disability, such as spinal trauma, may also qualify.
For illnesses, the most commonly considered for waiver of premium include any illness that requires a significant hospital stay where the policyholder is essentially incapacitated.
Many waiver of premium riders include a waiting period before the benefits can be claimed. The policyholder may need to be deemed disabled for six months before the premiums will be waived. Other factors may also be required, such as the policyholder may need to be, aside from the newly acquired disability, be considered of sound enough mind and body that it would be reasonable to expect he could be an integral member of the workforce.