Whole Life Insurance and the Waiver of Premium Rider

By Tes Kurtz on February 16th, 2010

Whole life insurance provides financial security for you and your family. Once you purchase a policy, you don't want to lose the coverage. But if you become injured and are unable to work, and as a result cannot pay your premiums, your whole life insurance policy may be put in jeopardy. Adding a waiver of premium rider to your policy may safeguard your life insurance coverage.

Waiver of Premium Rider

A rider is an attachment to your insurance policy that changes the terms or coverage of your policy. There are many different types of riders, which can be added to your policy for an additional fee. The waiver of premium rider stipulates that while the policyholder is disabled, according to the rider or policy's definition of disabled, the insurance company shall give up the right to collect premiums.

Understand the Insurer's Definition of Disabled

A key to understanding the waiver of premium rider is understanding your insurer's definition of disabled. Insurance companies typically use two different definitions:

  1. Established Profession Disability. You are disabled if you cannot perform the duties required to accomplish tasks in your established profession
  2. Any Profession Disability. You are disabled if you cannot perform the duties of any profession

A rider that defines disability as the inability to perform the duties of your established profession has its advantages. For example, if you are a trained mechanic and suffer back injuries that prevent you from participating in the physical labor of your job, you are disabled under the "established profession" definition. You may be able to find work that is not as physically demanding, but it's not the occupation in which you were educated and trained--nor is it the occupation you were employed in when the injury occurred.

You should always carefully read the terms of any life insurance policy you are considering, and you should also be sure to check which disability definition your insurer uses for the waiver of premium rider.

How the Rider Works

In order for this rider to go into effect, you must be disabled for a consecutive number of months (outlined within the terms of the rider). Some insurers set this minimum at three or four months, but most set it at six months.

Once you meet the minimum time length, your life insurance company waives your premium as long as you are disabled--whether it's a year, several years, or the rest of your life. Typically, any payments made during the waiting period are refunded.

If you do overcome your disability and are able to return to the job in which you are educated and trained, you are typically required to begin paying your premiums again. However, you should not be responsible for any past payments.

If you are interested in including the waiver of premium rider in your new whole life insurance policy, you can obtain life insurance information, advice, and competing quotes from a qualified life insurance agent.

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