What is a Waiver of Premium? Everything You Need to Know

A Waiver of Premium (WOP) is an optional rider that can be added to many life insurance policies. In the event you become totally disabled and unable to work, this rider waives your premium payments, ensuring your policy remains active without any financial burden on you during the period of disability.

In this guide, you'll learn:

How a waiver of premium works
Benefits of having a waiver of premium
Eligibility requirements and limitations

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Updated on

July 17, 2024

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Glossary

Waiver of Premium

How Does a Waiver of Premium Work?

Upon becoming totally disabled (as defined by your policy), you typically notify your insurance company and provide proof of disability. Once approved, your premium payments are waived, usually after a waiting period (e.g., 90 days). The waiver remains in effect as long as your disability continues, up to a specified age, or until your policy matures or expires.

Benefits of Having a Waiver of Premium

Financial security: Ensures your life insurance coverage continues even if you can't work due to a disability.
Peace of mind: Alleviates financial stress during a challenging time, allowing you to focus on recovery.
Preservation of assets: Prevents you from having to liquidate savings or investments to keep your policy active.
Protection for loved ones: Maintains the death benefit your family relies on for their financial security.

Eligibility Requirements and Limitations

Age restrictions: Typically available to individuals under a certain age (e.g., 60 or 65).
Definition of disability: Varies by insurer, but often requires the inability to perform your occupation or any occupation for which you are reasonably suited.
Waiting period: A period of time (e.g., 90 days) you must be disabled before the waiver takes effect.
Additional cost: WOP riders are not free and will increase your overall premium.
Medical underwriting: May be required, especially if you have a history of certain health conditions.

Conclusion

This guide has offered a comprehensive overview of Waiver of Premium riders and their benefits. For those seeking to deepen their understanding, we recommend exploring our guide on Disability Insurance, which dives into the different types of disability coverage and their implications in greater depth.

If seeking a licensed professional, consider our services. Our insurance advisors and client support team are here to assist you with your insurance needs.

Please note that insurance regulations and policy specifics can vary by state and insurer. It is always recommended to consult with a licensed insurance professional for personalized advice tailored to your individual circumstances.

Waiver of Premium FAQ:

What is a waiver of premium rider in life insurance?

A waiver of premium rider is an optional addition to a life insurance policy that waives the policyholder's premium payments if they become totally disabled and unable to work. This ensures that the policy remains active and the death benefit is still available to beneficiaries even if the policyholder can no longer afford the premiums due to their disability.

How much does a waiver of premium rider cost?

The cost of a waiver of premium rider will vary depending on factors such as the insurance company, the policyholder's age and health, and the amount of coverage. Typically, the cost is a small percentage of the base premium. It's important to compare quotes from different insurers to find the best value.

How does a waiver of premium work?

If you become totally disabled and unable to work, you would notify your insurance company and provide proof of disability. Once approved, your premium payments would be waived for the duration of your disability, up to a certain age or policy term.

What types of disabilities are covered by a waiver of premium rider?

The types of disabilities covered vary by insurer and policy. Typically, it requires the inability to perform your own occupation or any occupation for which you are reasonably suited. It's essential to read the policy terms carefully to understand the specific definitions and requirements.