Global Privacy Signal Detected
Skip to main content

Waiver of Premium Rider: How it Works and Why You Should Consider It

Have you ever considered what would happen if you were unable to pay your life insurance premiums due to a disability or other unforeseen circumstance? It’s a scary thought, but it’s important to be prepared. That’s where a waiver of premium rider comes in.

A waiver of premium rider is designed to kick in if you become disabled and are unable to pay your life insurance premiums. It can save your policy from lapsing and ensure your loved ones are still provided for, even if you can’t financially contribute. What exactly is a waiver of premium rider and how does it work? In this article, we’ll break down what you need to know about this vital insurance feature.

What Is a Waiver of Premium Rider? 

A waiver of premium rider is an optional life insurance policy add-on that allows insurance companies to waive insurance premiums should the insured become seriously ill, injured, or physically disabled and unable to work. Worrying about your finances can only add to the stress caused by a disability. A waiver of premium rider might alleviate some of this mental strain, allowing you to focus on your recovery and other more pressing needs.

How Does a Waiver of Premium Rider Work? 

While some life insurance policies include a built-in waiver of premium rider, you most commonly need to purchase one for a flat fee when taking out a new plan. If a disability subsequently prevents you from working for six months or longer, the waiver would allow you to forego premium payments until you display an ability to return to work.  

If your disability never goes away, you could forego payments indefinitely. If you return to work only to experience another disability or relapse with the same condition, you could file another claim using the same waiver provision. Keep in mind that pre-existing conditions would not fall under waiver of premium coverage.

Benefits of a Waiver of Premium Rider 

Adding a policy waiver to your life insurance plan can pay off later on. Consider the following:

  • Riders act as “insurance for your insurance”:  One in four people become disabled at some point during their career. Riders fill gaps in your policy and protect you from unfortunate surprises.
  • Free up funds for immediate needs:  A rider would allow you to reroute funds otherwise lost to monthly premiums toward imminent life stressors like medical bills, rent, groceries, physical therapy, etc. 
  • You can use the same rider multiple times: Waiver of premium riders do not expire with a single use, allowing you to reutilize them for separate or recurring disabilities.

Waiting Periods for Waiver of Premium Riders 

Generally, after filing your disability claim, you will have to continue making monthly life insurance payments during the rider’s waiting period. These windows typically last around six months but occasionally end sooner or stretch out to a year. If your disability claim sees approval, you may receive a full refund for all premiums you paid during the arbitration process.

Waiting periods allow insurers time to properly investigate each claim and protect them from invalid claims. That said, waiting periods can impose an additional strain upon anybody already out of work. Set aside some extra money to sustain yourself through this underwriting phase. 

How a Waiver of Premium Rider Pays Benefits 

Say you break your back at work or develop a debilitating illness. After filing a claim, providing all the necessary documents, and getting approved by your insurance company, a waiver of premium benefit would start paying your life insurance premium for you and absorb the loss of your regular monthly contribution.  

Your insurance company may also reimburse you for any payments made during your waiting period. Depending on the company’s policy, they may continue to fund your policy until you reach retirement age or a doctor deems you fit enough to return to work.

Qualifying for a Waiver of Premium Rider

Qualifying for a waiver of premium rider can often prove difficult as you must meet insurance companies’ definition of a disability, which almost always requires a doctor to deem you “totally disabled.” A total disability means you need regular medical oversight and exhibit one of the following deficiencies:

  • Ability to work but have gone blind in both eyes or lost multiple limbs.
  • Inability to perform any duties at your current occupation for an initial period.
  • Inability to perform the duties of any occupation for which you’d otherwise qualify (after the early period of your disability).

As previously stated, insurers will not consider any pre-existing conditions to qualify under a waiver of premium rider.

Age Limits on Waiver of Premium Riders 

Most insurance companies set age restrictions for waiver of premium riders. Typically, anyone considered retirement age (65 or older) has little chance of securing a waiver of premium benefit. Younger people without high-risk occupations or hobbies have a much higher likelihood of approval, especially compared to people nearing late-middle age who work physically demanding jobs.  

Your overall health also plays a significant role in your qualifying ability, another reason why these waivers favor the young. Despite this, some insurance companies allow greater leniency than others. Make a point to verify these finer details with your provider before purchasing a rider.

How Much Does a Waiver of Premium Rider Cost? 

Waiver of premium rider fees get added to your premium payments and stay the same throughout your policy. This increase typically falls between 10-25% of the original premium, often translating to somewhere between $10-50 a month.

The same list of factors assessed to qualify you for coverage will also determine the cost of your rider. Healthy younger people with lower-risk jobs and lifestyles often pay less for their waivers. However, every insurance company imposes its own stipulations and restrictions reviewable during its underwriting process

Waiver of Premium Riders vs. Disability Insurance 

While premium riders make sense as a means of protecting your life insurance policy, they do not offer much beyond that. A standalone disability insurance policy provides a much wider safety net. Benefits of disability insurance include:

  • Income protection: Disability insurance can provide up to 60%-80% of your prior income to spend any way you want.
  • More flexible timeframes and qualifications: Whereas a waiver of premium rider invokes long wait periods, you can access your disability insurance over shorter stretches if necessary. Disability insurance also does not impose the same stringent qualifications for coverage required by premium riders.
  • Potentially free: If you’ve worked for a long time and consistently paid Social Security taxes, you may qualify for free Social Security Disability Insurance.

By comparison, waiver of premium riders take a long time to kick in and only cover those who meet a restrictive set of qualifications. Even then, premium riders might prove helpful during difficult times and can run concurrently with a disability plan for maximum coverage.

Who Should Add a Waiver of Premium Rider to Their Life Insurance? 

Even if an insured is eligible to add a waiver of premium rider to their life insurance policy, it may not be the best fit for everyone. Those meeting the following criteria may see the most benefits:

  • People with a single income source: Losing work may not so directly affect those with a secondary income stream.
  • You have a high-risk occupation or hobby: This includes firefighters, police officers, construction workers, movers, truck drivers, rock climbers, skateboarders, and countless others. If you can easily get hurt at the workplace or while chasing your passions, consider adding a waiver of premium rider to your life insurance plan.
  • You have serious illness throughout your family history:  If degenerative conditions persist in your genetic makeup, securing a waiver of premium rider would prepare you in advance for any such turn of events.

How to File a Waiver of Premium Claim 

To start a waiver of premium claim, follow these steps in order:

  1. Obtain a medical statement from your physician:  Your insurer will not just take your word. You will need a signed document from your doctor stating when the injury occurred and whether you can work.
  2. Get a notice from the Social Security Administration (SSA): Some insurers may require an SSA notice as secondary evidence to prove you have a disability preventing you from work.
  3. Contact your insurer and file your claim:  Alert your provider of your intent to file a claim and ask about any additional actions required on your end. Continue paying your premium through the waiting period until your rider kicks in.

Plan for your family’s future. Get a life insurance quote today.

Get a quote

Plan for your family’s future. Get a life insurance quote today.

Get a quote