Life insurance can provide peace of mind in knowing that loved ones and survivors will have the funds that they need in case of the unexpected. But, not all life insurance policies are exactly alike, so in many cases, adding various riders can help to better “customize” the coverage to fit specific anticipated needs.
A life insurance rider is defined as an “add-on provision to a basic policy that provides additional benefits to the policyholder.” In some cases, this will require an additional premium amount, and in other cases, it won’t.
Why “Customizing” Your Life Insurance Coverage is Important
Although there are many different types of life insurance that is available in the marketplace today, most standard policies will not leave much room for customizing or modifying, other than with the coverage amount (and length, if you’re purchasing term).
But the addition of certain riders can provide you with the added coverage you may need, just in case. This could even include life insurance benefits that can be used by the insured while he or she is still alive. One such option is the waiver of premium rider.
What is a Waiver of Premium Rider?
With a waiver of premium rider in force, the policy holder’s obligation to pay further premiums will be waived, should he or she become disabled or seriously ill and unable to pay. Because of this, the policy will remain in force, even during a difficult time for the policyholder. This type of rider may be available on both term and permanent life insurance policies – and it is one of the more popular riders that is added to life insurance coverage.
How Does the Waiver of Premium Rider Work?
If an insured becomes disabled or terminally ill, it is possible that he or she may no longer be able to work and earn an income – which in turn may take away the ability to continue paying his or her life insurance premiums. However, in cases like this, it is even more important that the individual keep their life insurance in force.
The waiver of premium rider can help to do just that by ensuring that the policy stays in-tact, even though responsibility of the insured / policyholder to continue making premium payments has been waived.
If the insured on the policy becomes disabled or terminally ill, this condition must occur after the life insurance policy has been issued to be eligible to use the waiver of premium benefit.
In most instances, there is also a requirement that the life insurance policy be in force for a certain amount of time. And, typically, under a waiver of premium rider, it will also be required that the insured wait between three and six months after the illness or disability occurs before the rider takes effect.
If the insured should recover from the illness or disability, he or she may or may not be required to start paying the premiums again, depending on the how the particular waiver of premium rider is structured.
Also, a waiver of premium rider will usually expire when the insured on the life insurance policy turns age 60 or 65. This is because many people are approaching retirement when they are at that age.
How Much Does a Waiver of Premium Rider Cost?
The cost of a waiver of premium rider can vary. It is based upon the insurance company that you are purchasing the coverage through, as well as the age and health condition of the insured at the time the rider is added (which is typically at the time of policy issue).
In some cases, the additional cost of the waiver of premium rider will simply be added to the overall premium amount. (This is usually no more than just a few extra dollars per month, per $1,000 in life insurance coverage).
Alternatively, the added cost of this rider may be simply assessed as a one-time additional policy fee. In other cases, there may not be any added cost for adding this life insurance rider option.
Should You Consider Adding a Waiver of Premium Rider to Your Life Insurance Coverage?
Different situations will usually call for different benefit options. So, while the waiver of premium option may not be right for everyone, you may want to consider the addition of this option if you have certain serious illnesses that run in your family, and/or if you work in a riskier occupation and could become injured and disabled.
The waiver of premium rider is particularly popular – as well as valuable – for many people, as a total disability or a terminal illness will usually decrease an individual’s ability to earn an income in the future. This means, in turn, that it will also be more difficult to pay bills such as their life insurance premium.
This lack of income can also mean that it is more difficult to save money – and in many instances, an individual may even have to dip into their savings or investments to just keep paying their necessary living expenses. With that in mind, a waiver of premium option can be extremely helpful, as it will not only relive the pressure on additional outgoing expenses but also – because the policy will remain in force – it can also allow the insured’s loved ones and survivors to recoup some of their debt by using the death benefit proceeds from the policy.
On the other hand, however, if you are already in the age range of 60 or 65 (or older) and you are purchasing life insurance coverage, the waiver of premium rider may not be a good option for you – and in many cases, this rider will not be available for purchase.
How to Find Out More About Life Insurance and the Waiver of Premium Rider Option
Before purchasing a life insurance policy with a waiver of premium rider, it is important to know exactly how this option will work on the plan you’re considering, as well as whether or not it will require any additional premium outlay.
As with any financial or insurance planning, you will want to ensure that you have the benefits that you may need, yet without having to pay an added amount of premium for those that you will not likely use.
If you would like to know more, we can help. Our experts are available to walk you through a myriad of coverage scenarios to determine what will work best for you – as well as for your budget. To learn more, just simply take a minute to fill out the quote form on this page.
Life insurance and its many options can be somewhat confusing. But the process of narrowing down just exactly what will be right for you can be much easier when you’re working with an ally on your side. So, contact us today – we’re here to help.