If you become disabled and can no longer work, you probably won’t be able to pay your life insurance premium either. By purchasing a waiver of premium rider, you ensure that your insurance isn’t canceled, even though you don’t pay the premiums. You usually have to wait six months from the time you become disabled before this benefit kicks in. Read the definitions and terms in these riders carefully and discuss them with your agent.
Some waivers take over the payments if you can’t work in your chosen profession (or a profession in which you have experience or for which you’re trained), while other waiver of premium riders pay only if you can’t work in any job. Still others may combine these requirements so that for a period of time (two years, for example), the company waives the premium if you can’t work in your normal line of work, but after that waives the premium only if you can’t work in any job. The insurance company will most likely conduct its own medical exam to verify that you are disabled and unable to work.
For universal life insurance policyholders, the waiver of premium rider works a bit differently. Because a changing portion of your premium goes toward the insurance coverage and the rest for administrative fees and cash value, the waiver of premium rider only covers the cost of the insurance and the administrative fees. No additions are made to your cash value portion except from any interest that is earned.
Buying this rider usually costs you 5 to 10 percent more, possibly higher for term life because you’re always renewing it. To qualify, you must have documentation from your physician that you’ve become disabled and can’t work. For most life insurance holders, a waiver of premium rider is probably not such a good deal. You’re better off increasing a disability insurance policy because it would pay for your expenses — including a life insurance premium — if you became disabled. But if you don’t have disability insurance, this rider may be an inexpensive means to add that coverage without having to buy a whole new disability policy.
Some waivers take over the payments if you can’t work in your chosen profession (or a profession in which you have experience or for which you’re trained), while other waiver of premium riders pay only if you can’t work in any job. Still others may combine these requirements so that for a period of time (two years, for example), the company waives the premium if you can’t work in your normal line of work, but after that waives the premium only if you can’t work in any job. The insurance company will most likely conduct its own medical exam to verify that you are disabled and unable to work.
For universal life insurance policyholders, the waiver of premium rider works a bit differently. Because a changing portion of your premium goes toward the insurance coverage and the rest for administrative fees and cash value, the waiver of premium rider only covers the cost of the insurance and the administrative fees. No additions are made to your cash value portion except from any interest that is earned.
Buying this rider usually costs you 5 to 10 percent more, possibly higher for term life because you’re always renewing it. To qualify, you must have documentation from your physician that you’ve become disabled and can’t work. For most life insurance holders, a waiver of premium rider is probably not such a good deal. You’re better off increasing a disability insurance policy because it would pay for your expenses — including a life insurance premium — if you became disabled. But if you don’t have disability insurance, this rider may be an inexpensive means to add that coverage without having to buy a whole new disability policy.
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