A disability can cause serious financial strain on a family. Given all the new, unexpected expenses, paying life insurance premiums might become a struggle. To help offset the financial stress of a disability, some insurance companies offer "waiver of premium" riders to life insurance customers.
What is a waiver-of-premium rider?
A waiver-of-premium rider is designed to protect life insurance customers from an unexpected disability that makes it difficult to pay premiums. Normally, inability to pay your life insurance premiums each month would result in cancellation of your coverage. The waiver-of-premium rider allows qualified life insurance customers who develop disabilities to stop paying their monthly premiums for the duration of their disabilities -- and keep their coverage.
A waiver-of-premium rider may come with extra perks. MassMutual, for example, lets those who become disabled and who have a term life insurance policies with waiver-of-premium riders convert their term insurance into permanent insurance. Because a permanent policy can be impossible to get when you're already disabled, this could be an attractive option.
Who qualifies for a waiver-of -premium rider?
To invoke the benefits of your waiver-of-premium rider, you must meet the specific guidelines included in your policy. Generally, the riders operate based on the following rules:
- You must have a total disability. ING Financial Services (which offers the waiver on its employees' life insurance policies), for example, defines total disability as a condition that leaves you unable to perform your job. This can result from a mental disease, an illness or a bodily injury. Additionally, if you lose sight in both eyes or lose the use of at least one hand or foot, you can claim a waiver of premium after the specified time in your policy.
- You must have had the disability for a certain amount of time. New York Life, for example, requires the insured person to be disabled continuously for six months. This time period varies with each life insurance company. In some cases, this requirement is waived. For example, ING will waive its four-month waiting period if you experience loss of sight or a limb.
- You must meet certain age requirements. This also varies from company to company. ING allows employees only under age 56 to apply for the rider. New York Life, meanwhile, has restrictions based on how old you are when the disability begins -- if it begins after you hit age 65, your premiums won't be waived.