Wavier of Premium Rider in Life Insurance:
Life insurance is a contract between the Life Insurance Company and the insured customer. The feature of Waiver of Premium in a life insurance policy makes sure that the life insurance policy does not end or become inactive even after the death of the policyholder or due to the inability of the policyholder to pay the premium.
What is Waiver of Premium in Life Insurance?
Waiver of premium is a rider in a life insurance policy that waives off the premium payments by the insured if the policyholder suffers from critical illness, accidental disability, or serious injuries. The waiver of premium rider is available on payment of additional premium to the insurance company.
How does a Wavier Premium Rider Work?
Mr.Rizzu working for an MNC in the sales department does a lot of traveling as a part of his job. He is married with two kids and is the sole earner of the family. One day he met a financial advisor who advised Rizzu to take a life insurance policy and explained the benefits of the waiver of premium life insurance as a part of financial planning.
After listening to the financial advisor, Rizzo decided to purchase term insurance with a “Waiver of premium” rider for a period of 30 years. He started paying a premium for his term insurance policy yearly and renewed the policy on time.
Once while he was traveling to another city as a part of his job, he met with an accident and was admitted to a nearby hospital. The accident was severe and both his legs were amputated. This incident left him and his family in a deep shock since he was the sole bread earner in the family. This accident made him quit the sales job and search for another job. In the meantime, his term insurance policy was due for renewal and he had no money to pay the insurance company.
He intimated this to his insurance company and he received a letter stating that he need not pay any further premiums as all the future premium payments are waived off. All thanks to the “Waiver of premium” which he opted for at the time of taking the life insurance policy.
Key Benefits of “Waiver of Premium” Rider:
- In case of permanent disability of the policyholder, payment of future premiums is waived off.
- In case of contracting any of the waiver of premium on critical illnesses mentioned in the policy copy, future premium payments are waived off.
- Premiums paid under this plan are eligible for Tax benefits under Section 80D of Income-tax.
Reasons to Buy Life Insurance Waiver of Premium Rider
- Protect your loved ones financially from adverse effects of unforeseen events like Death waiver of premium rider, Accidental Total Permanent Disability, and Critical Illness
- We understand every individual has different needs and thus, give you three different coverage options to choose from
- No need to pay future premiums in case of unforeseen events as we fund them for you
- We provide cover for 10 critical illnesses to support you in times of need
Who should take the “Waiver of Premium” Rider?
As discussed earlier the Waiver of premium rider life insurance helps the policyholder in case of his/her disability to pay the premium due to critical illness or permanent disability. This rider is designed to help the policyholder have the insurance benefit even if he/she suffers from any major illness or disability.
Waiver of premium can be as follows:
- As a part of the policy: Some insurance companies provide the waiver of premium option as an inbuilt cover. The premium for this option is included in the overall premium payable.
- As an add-on: Few insurance companies offer this option as an add-on. The premium for this is charged separately and is available only if the base policy opts.
The “Waiver of premium” rider costs only a few bucks if opted as an add-on or rider. But the benefit it provides over a long period of time is immense and it is advisable for everyone to take this rider along with the base policy. If the “waiver of premium” rider has opted, then on the policyholder’s death, disability, or critical illness, the future premium payments are waived off and the policy will continue to run until its original tenure while all the other terms and conditions remain the same.
This rider is introduced keeping in mind that the earning capacity of the policyholder will decrease in case of death, disability, or critical illness, and hence this feature enables them to enjoy the life insurance cover without any premium payment.
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