Glossary
Waiver of premium rider, defined
An add-on that keeps a policy in force without payments if the insured becomes totally disabled and stays disabled past a waiting period. The insurer pays the policy's cost itself for as long as the disability continues, and the coverage and any cash value growth carry on as if the owner were paying.
In practice
The definition of disability in the endorsement controls everything: some versions require inability to work at any occupation, others at the insured's own occupation for a period and then any occupation. The waiting period is commonly around six months, and the payments made during it are usually refunded once the claim is approved. The benefit typically ends at a set age, and a disability that begins after that age does not qualify. On a term policy it is inexpensive and worth a look; on a large permanent policy the cost is higher because the amount being waived is larger.
A worked example
Suppose a thirty-five-year-old carpenter pays $60 a month for a term policy and $8 a month for the waiver. He injures his back and cannot work for two years. After the waiting period the insurer picks up the $68 a month, refunds what he paid during the wait, and resumes billing him when he returns to work. Hypothetical figures.
Applies to: Term Life InsuranceLife Insurance