What is a disability waiver of premium benefit rider?
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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
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UPDATED: Mar 16, 2022
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Here’s the Scoop
A disability waiver of premium rider is an add-on for life insurance that allows you to skip premium payments if you become temporarily or permanently disabled and cannot work
If you become disabled, you must file a disability claim with your life insurance company and then wait a certain amount of time (typically six months) before the company will waive your premiums
A disability waiver of premium rider may cost between 15% and 25% of your base premium, which could be between $10 and $50 per month
When shopping for life insurance, you may encounter add-ons known as life insurance riders that can be used to customize a policy and provide additional benefits. Some life insurance companies may offer riders automatically included in your policy, while others may require you to pay an additional fee for a rider.
One standard life insurance rider is a disability waiver of premium that ensures your policy doesn’t lapse if you become disabled and cannot work. Below, we will discuss how a disability waiver of premium rider works, how much it costs, and how to qualify for waived premiums.
Continue reading below to determine whether a disability waiver of premium rider is right for you.
What is a disability waiver of premium rider?
A disability waiver of premium rider is a clause that you can choose to add to your life insurance policy. It allows you to cease paying your premiums if you become temporarily or permanently disabled.
A waiver of premium for disability will ensure that your policy remains in force even if you are disabled and cannot make your premium payments.
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How does a disability waiver of premium rider work?
If you become disabled and cannot pay your premiums, you must file a disability claim with your insurer. After you file the claim, there is typically a waiting period during which time you must continue to pay your premiums. However, suppose that you are approved for the disability waiver of premium to go into effect. In that case, your life insurance company will reimburse you for any premiums that you paid during the waiting period.
How long is a waiver of premium rider waiting period? Typically, the waiting period for a disability waiver of premium rider is six months, but you should check with your insurance company.
If you are temporarily disabled, you will need to continue paying your premiums once you return to work.
How much does a disability waiver of premium rider cost?
A disability waiver of premium rider may be charged as a one-time fee or as a monthly increase to your life insurance premium. You may have to pay between 15% and 25% of your monthly term life insurance premium, which may be between $10 and $50 per month.
However, the cost of the rider will depend on many of the same factors that determine your life insurance rates, such as your age, location, health classification, and more.
Who qualifies for a disability waiver of premium rider?
To take advantage of the benefits that accompany your disability waiver of premium rider, you must meet your insurance company’s definition of a disability. In addition, your insurance company may also have a maximum age limit.
Many insurance companies require that you be totally disabled, which generally indicates that you are under the regular care of a medical professional and meet one or more of the following criteria:
You can work, but you are blind in both eyes or have lost two limbs.
You cannot complete the duties required by your current occupation for a time specified by your insurer.
You cannot complete the tasks needed for any profession that you qualify for after a time specified by your insurer.
If your insurance company has an age limit, it is generally around 65 years old. The company may also prohibit new policyholders from purchasing a disability waiver of premium rider over a certain age.
Your insurance company may vary regarding its definition of disability and the requirements you must meet to have your premiums waived. Therefore, checking with your insurance company is the best way to understand whether you qualify for a disability waiver of premium rider.
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Should I buy a disability waiver of premium rider?
Approximately 25% of people become temporarily or permanently disabled during their careers. Therefore, a disability waiver of premium rider typically helps to ensure that your life insurance policy doesn’t lapse if you lose income due to a disability.
However, a disability waiver of premium rider cannot protect your income or provide an income if you become disabled. So if you’re seeking something that can provide monthly payments while you’re unable to work, a separate disability insurance policy will likely be beneficial.
With that being said, a disability insurance policy may cost more than a disability waiver of premium rider, so whichever option you select may depend on your budget and personal preference.
What other riders should I add to my policy?
Below is a list of some of the most common life insurance riders:
Common Life Insurance Riders
Type of Life Insurance RiderWhat it Covers
Guaranteed Insurability RiderEnsures that you can purchase coverage in the future without the need for additional medical exams
Accidental Death RiderProvides extra death benefit if the policyholder dies due to an accident
Disability Waiver of PremiumAllows you to skip your premium payments if you become disabled temporarily or permanently without your policy lapsing
Family Income Benefit RiderProvides a steady stream of income for your family for a set period after your death
Accelerated Death Benefit RiderAllows you to receive a portion or all of your death benefit if you are diagnosed with a terminal illness
Child Term RiderProvides a death benefit if a child dies before a certain age and allows them to convert to a permanent policy once they reach maturity
Long-Term Care RiderProvides monthly payments to cover the cost of long-term care, such as a nursing home
Return of Premium RiderEnsures that you receive your premiums back in full at the end of your term (or your beneficiaries receive them when you pass)
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If you’re concerned about becoming disabled, a long-term care rider may give you peace of mind, which could cover your medical or care-related expenses if you become permanently disabled and need extensive care. In addition, an accelerated death benefit can help provide some income if you are diagnosed with a terminal illness.
Other riders provide benefits not directly related to medical or disability issues. For example, if you still want more coverage, you can use a guaranteed insurability rider to add coverage to your policy in many different circumstances, such as getting married, having children, or experiencing a decline in your health.
When purchasing life insurance, it’s important to compare your options to ensure that your policy meets your needs. For example, suppose that you work in a high-risk occupation, or you’re worried about the possibility of becoming disabled in the future. In that case, you may want to consider adding a disability waiver of premium rider to ensure that your policy doesn’t lapse.
