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Life insurance waiver of premium

This rider can keep your coverage from lapsing if you can't pay your premium after a disability.


Fact checked

A waiver-of-premium rider pauses your premiums if you become unable to work due to a disability from an injury or illness. Some insurers combine both circumstances — unemployment and disability — into the same rider, while others offer separate riders. Either way, you’ll need to meet your insurer’s eligibility criteria — otherwise, your coverage could be canceled.

What is a waiver of premium?

A waiver of premium is a rider that can be added to your life insurance policy. It keeps your policy active if you become disabled or unemployed and can’t pay your premiums. Once your disability or unemployment periods end, you’ll need to start making premium payments to maintain your coverage.

Some insurance companies will cover both disability and unemployment under a single waiver of premium rider, but it’s more common for the two to be separate policy riders.

When would my premium be waived?

It depends on your insurer and the type of waiver you have.

Disability waiver-of-premium rider

In order to qualify, you may need to:

  • Meet your insurer’s definition of a disability. Depending on your insurer, this can mean being unable to work in your field, unable to work in any occupation or being under medical care for your disability. Read your policy documents closely to understand exactly what qualifies as a disability.
  • Pass an exclusion period. For example, you may not be covered if you become disabled in the first six months after starting a policy.
  • Pass a waiting period. You’ll need to be disabled for the amount of time specified by your insurer, anywhere from four weeks to six months, before the waiver will take effect.
  • Be under a certain age. Some insurers don’t waive premiums for policyholders over a certain age, usually around 60 or 65.
  • Provide proof of your disability. Your insurer will likely want confirmation from a doctor that you’re disabled and may request a letter or a copy of your medical records.

Unemployment waiver-of-premium rider

In order to qualify, you may need to:

  • Notify your insurer immediately. Your policy may require you to let your insurer know as soon as you become unemployed — and before you miss any payments.
  • Pass an exclusion period. For example, you may not be covered if you become unemployed in the first six months after starting a policy.
  • Pass a waiting period. You’ll need to be unemployed for a certain amount of time, usually 30 to 90 days, before the waiver will take effect.
  • Actively search for a job. Some insurers may require proof that you are actively searching for a job.
  • Apply for unemployment. Some insurers may require you to apply for unemployment and provide proof that you’re receiving benefits.

What’s in the fine print?

Both unemployment and disability waivers come with exclusions or fine print, including:

  • A waiting period on the waiver of premium rider. Most policies include a waiting period, sometimes up to 6 months. If you become disabled or unemployed before it’s up, the waiver won’t kick in at all.
  • A time limit. Some policies limit the amount of time you can miss your premiums.
  • Inability to modify coverage. Many policies won’t let you add a waiver of premium to your policy once it’s active — you’ll need to sign up for it before your policy starts.

Does the waiver apply if I can’t work due to a preexisting condition?

It depends on your insurer. Most insurers specifically exclude preexisting conditions from coverage. If you have a health condition, speak to the provider you’re interested in before signing up to find out how you’re covered.

What should I watch out for?

Each insurance company handles waivers a little differently. When comparing policies, look into how each insurer treats:

  • Recurring vs. new disabilities. Some insurers will waive the waiting period if you have a recurring disability. For example, if you return to work after recovering from a disability and have a relapse, you wouldn’t have to wait a second time before your waiver-of-premium rider kicks in.
  • Age of eligibility. Each insurer sets its own limits for the age policyholders are no longer eligible for a waiver of premium.
  • High-risk professions. If you work in a risky or hazardous job, it may be more difficult to qualify a waiver-of-premium rider. Check with the insurer you’re interested in before applying to find out how high-risk professions are handled.

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Bottom line

A waiver of premium is an optional add-on that prevents your policy from being canceled if you become disabled or unemployed. Depending on which insurer you choose, you may have to pay an additional fee for this add-on, but it could help you to maintain your coverage when you’re not earning income.

To get the best possible policy for your needs, take the time to compare life insurance providers.

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