What Is A Waiver Of Premium Rider & Is It Worth It In 2021?

 By Sa El Published:

It's easy to think that you won't need the waiver of premium rider, especially if you want the lowest rate when looking for life insurance.

But hear me out: 

If you face a disabling illness or encounter other hardships in life the last thing you would want is for your policy to lapse.

waiver of premium

In this guide I will go over the waiver of premium rider, explain how it works, and discuss the rider would work together with your life insurance policy.

In This Article



What is a Life Insurance Rider?

Riders are add-on provisions to your life insurance policy that you can optionally choose to purchase for greater flexibility and benefits beyond the standard plan.

Riders work especially well if you fall ill.

Several kinds of riders exist, including term life, accelerated death benefit, guaranteed-purchase-option, and waiver of premium riders.

Let's look at how the waiver of premium rider works for people with disabilities, which is one of the more common riders. 

What is the Waiver of Premium Rider?

The waiver of premium first came to the U.S. in the 1890s.

As sickness became more widespread in North America and Europe, more people defaulted on their premiums due to a loss of income from disability.

This caused the insurance companies came up with a solution—the waiver of premium rider. 

A waiver of premium rider is a policy underwritten by the insurance company that will cover the total cost of the premium if you become disabled.

In other words, you can forego the premium and still retain your life insurance policy.

Additionally, although most term life and whole life plans will waive the full cost of premiums with a rider, other plans—such as universal or variable life plans—will waive only the insurance charges for the premium.

If you’re purchasing a life insurance policy for the first time or switching to a different provider, you may want to factor in the waiver of premium rider before settling on a specific plan.  

Return of Premium Rider

Also, keep in mind the difference between a waiver of premium vs. a return of premium rider.

The two terms are completely different, but easy to confuse due to the similar phrasing. 

A return of premium rider sets a premium payment plan for a set time, like 20 or 30 years.

However, if you live beyond the duration of that payment plan, you receive a refund or a return of your insurance premiums paid during that time.  

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How Does This Rider Define A Disability?

This section can be tricky, as insurance providers’ definitions of disability may not align with your interpretation of disability.

To qualify and have your premiums waived, you must be totally disabled.

But, what does total disability mean?

Total disability entails an illness or injury that leaves you unable to work. Total disability applies to both your current place of employment and any job for which you have been previously trained or are qualified to work.

Bear in mind that several insurers will not enact the waiver of premium benefit for some or all of the following conditions that can lead to a disability:

  • A suicide attempt or other form of self-harm
  • Operating an aircraft
  • Military service during wartime

But some policies specify total disability even further, restricting who can qualify. Many policies require that you must fit one or both of the following criteria for total disability:

  • Loss of sight in both eyes
  • Inability to use both feet or both hands (or one hand and one foot)

Most companies will also put in place provisions so that they cannot contest or challenge your claim of disability beyond a certain period after the rider goes into effect.

This incontestability clause protects you as the beneficiary and ensures that you benefit from your waiver of premium.

Lastly, you will need to continuously provide evidence of total disability, such as a doctor’s examination.

If you are no longer disabled, you are legally obliged to inform your insurer, which may require you to restart premium payments. 

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Is There A Waiver of Premium Waiting Period?

Unfortunately, nearly all insurance policies stipulate waiting periods before your waiver takes effect.

For most policies, this waiting period lasts for six months (180 days) after you become disabled.

After six months, your waiver will apply, and you will no longer have to pay your premiums as long as you remain disabled.

So, bear in mind the waiver of premium waiting period, and factor in six months of payments before expecting the premium costs to lapse.

How Much Does a Waiver of Premium Rider Cost?

The rider is considerable, but not an enormous financial burden. 

It typically adds up to an extra 5% to 10% cost on top of your existing premium. 

However, the exact cost will depend on your insurance policy and your state of residence.

what is a waiver of premium rider

You’ll need to get a quote from a life insurance company about their waiver of premium costs, as most insurance companies have multiple plans at different rates for this rider. 

If you have any difficulty getting a quote or want to compare prices across life insurance plans, use Simply Insurance’s easy quote tool on our website.

THE SIMPLY INSURANCE WAY

Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get life insurance coverage within minutes of getting your quotes and applying.

Any Age Limits on the Waiver of Premium?

Yes. The exact age limit depends on the policy.

Some policies specify that the waiver must kick in before the policy anniversary closest to the insured’s 65th birthday.

Others state that the age limit is 60; if you become disabled after that age, you will likely not qualify for the waiver of premium rider.

Due to potential ineligibility, you may want to avoid purchasing a waiver of premium rider if you are fast approaching 60 and considering purchasing a new life insurance policy.

However, you will need to weigh the costs and determine whether that’s a risk worth taking.

Is a Waiver of Premium Rider Worth It? 

Right now, you’re probably asking one question: is the waiver of premium rider worth it?

In the grand scheme of things, the rider is not a huge expense. If you don’t become disabled, you might feel that it’s not worth the price. 

But life is unpredictable, and you cannot predict whether you will suffer an accident on the job or an illness that can lead to temporary or permanent disability and loss of income.

Should that happen, you may face the tough decision of deciding whether to pay your mortgage or pay your life insurance premium.

Rather than leaving matters up to chance, it’s best to consider a waiver of premium rider to safeguard your future. 

Taking Action

Even if you become disabled and lose your job, a waiver of premium rider offers you peace of mind and comfort.

You will be able to retain your life insurance policy and provide for beloved family members upon your passing.  But for some individuals, the cost and stipulations of a waiver of premium rider may not be worth it. 

If you need life insurance, you can get immediate quotes and coverage by clicking here or on any of the above buttons. 


Sa El

About the author

Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 13 years of experience in the industry.  He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.

Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 13 years of experience in the industry.  He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.


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