What is 'Waiver Of Premium Rider'

A waiver of premium rider is an insurance policy clause that waives premium payments in the event the policyholder becomes critically ill, seriously injured, or disabled.  Other stipulations may apply, such as meeting specific health and age requirements.  

BREAKING DOWN 'Waiver Of Premium Rider'

Available only at issue, policyholders often add the rider as an optional or supplemental benefit to a life insurance policy. Costs vary per insurer and applicant; insurance companies typically add the rider fee to the premium or charge an upfront fee.

Waiver of premium riders may not be available in all states.  Applicants with pre-existing disabilities are not permitted to obtain benefits. Placing a pre-existing limitation avoids the possibility of writing a policy which could not see premium payments from the high-risk applicants. 

Waiver of Premium Rider Waiting Period

Most waiver of premium riders contains a waiting period during which there can be no claim of benefits.  If disabled or hurt during the waiting period, the policyholder may receive a full refund of paid premiums.  Without a waiting period, the insurer’s assumed risk increases substantially, and devastating losses could result.

Waiver of Premium Rider Benefits        

Disability, critical illness, and severe injury are the most common qualifying conditions under the waiver of premium rider.  Terms, conditions, and benefits may vary by insurance product and issuing company.  A policyholder must be disabled for a specific period (e.g., six consecutive months) before the premiums waiver goes into effect. The waiver is also useful if an injury or illness prevents the policyholder from working in a traditional capacity.  The most commonly considered disease are those that require significant hospital stays resulting in the policyholder being unable to work. Some riders stipulate that the condition need only adversely affect the policyholder's occupation in which they received training and worked.

Requirements for filing a claim vary but typically include a physician's statement and notice from the Social Security Administration (SSA) confirming the disability. The applicant could then submit a completed claim form.  The waiver of premiums allows the redirection of limited personal funds to palliative care, personal finances, and living expenses.  However, the most substantial benefit is the continued protection of the insurance policy.

RELATED TERMS
  1. Waiver Of Premium For Disability ...

    Waiver of premium for disability is an insurance policy provision ...
  2. Rider

    A rider is a provision of an insurance policy that adds or amends ...
  3. Waiver Of Inventory Clause

    A clause in an insurance policy that says that the insurance ...
  4. Premium Balance

    The amount of premium that is owed to an insurer for a policy, ...
  5. Waiver

    The voluntary action of a person or party that removes that person's ...
  6. Future Purchase Option

    A feature of long-term disability insurance that allows policyholders ...
Related Articles
  1. Financial Advisor

    Should You Buy A Life Insurance Disability Rider?

    Does it make sense to pay an additional cost for a waiver of premium rider on a life insurance policy?
  2. Insurance

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  3. Financial Advisor

    A Closer Look At Accelerated Benefit Riders

    Accelerated benefit riders can allow policy holders to access the death benefit in their life insurance policy while they are still living if they meet certain conditions. Knowing what you get ...
  4. Financial Advisor

    How Accelerated Benefit Riders Fill Insurance Gaps

    Accelerated benefit riders have become the new darlings in the financial marketplace. Here's why.
  5. Financial Advisor

    Living And Death Benefit Riders: How Do They Work?

    Find out how these different riders work, and which type is right for you.
  6. Personal Finance

    CFPs: The Quarterback of a Financial Team Part 1

    In the event of an illness or injury, a CFP can play quarterback in helping you get benefits owed.
  7. Managing Wealth

    Tips for Insuring Your Salary

    Those with high incomes really can’t afford to be without disability insurance. Here's why.
  8. Insurance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  9. Financial Advisor

    Disability and Business Overhead Coverage for the Self-Employed

    What every small business owner or professional needs to know about individual and business overhead disability income insurance plans.
  10. Financial Advisor

    7 Issues to Consider When Determining Life Insurance Coverage

    Seven issues to consider when buying life insurance to ensure the coverage is tailored to meet your personal financial situation.
RELATED FAQS
  1. What is an elimination period?

    Elimination period is a term used in insurance to refer to the time period between an injury and the receipt of benefit payments. ... Read Answer >>
Hot Definitions
  1. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  2. Risk Tolerance

    The degree of variability in investment returns that an individual is willing to withstand. Risk tolerance is an important ...
  3. Donchian Channels

    A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time ...
  4. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, ...
  5. Moving Average - MA

    A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out ...
  6. Stop Order

    A stop order is an order to buy or sell a security when its price increases past a particular point in order to limit losses ...
Trading Center