What is Waiver of Premium Rider in Life Insurance?

When you buy a life insurance policy , you have the flexibility to purchase various add-ons or riders to suit your needs. One such popular rider is the ‘waiver of premium’ rider. Read on to know more about it.As a breadwinner of the family, you may purchase a life insurance policy that offers financial security to the family in your absence. You may pay the premium diligently to keep the policy active and enjoy its benefits. But, what happens, if for some reason, you are not able to premium.Will the policy lapse? Or is there a way for you to continue enjoying the policy benefits without paying the premium? The answer is yes. You can enjoy the policy benefit and continue to get insurance protection without having to pay the premium.How is that possible, though? The ‘waiver of premium’ add-on cover makes it possible.

As the name suggests, a waiver of premium rider is an add-on cover in a life insurance policy that waives off the future premium payments if you, as the insured, suffer from any critical illness, disability due to accident, or serious injuries and are rendered incapable of earning an income. You can purchase this add-on by paying an additional premium to the insurer.

The waiver of premium rider kicks in under the following circumstances –

• If you are disabled for at least six months.
• If you are diagnosed with any critical ailments such as cancer, cardiovascular disease, heart attack, etc.

*The terms and conditions for the rider to become active may vary from insurer to insurer. So, ensure that you read the terms and conditions thoroughly before signing the policy papers.

Anyone who holds a life insurance policy and is aged between 18 t0 65 years (the age minimum and maximum age limit may vary from insurer to insurer) is eligible to purchase the waiver of premium rider.

Just like any other life insurance add-on cover, the waiver of premium rider comes with a waiting period of 90 days. This means the insurance company will waive off the premium only if you contract a life-threatening disease or suffer from injuries after 90 days from the date of policy commencement.

Unlike other life insurance riders where you have the flexibility to purchase them at any time you want, you must purchase the waiver of premium rider at the time of buying the policy. And, once the add-on cover is added, most insurers do not allow cancelling it.

As a policyholder, you may not get the waiver of premium rider benefits if you are diagnosed with any critical illness or suffer from injuries due to the following reasons:

• If the disease or disability occurs during the waiting period
• HIV
• Participation in any illegal or criminal activity
• Participation in any adventurous or hazardous sporting activities like bungee jumping, hiking, diving, martial arts, etc.
• War, riots, strikes, invasion

The documents required for filing a ‘waiver of premium’ claim may vary from insurer to insurer. But, generally, the insurance companies ask for the following documents.

• The claim form (duly filled and signed).
• Copy of the policy documents.
• Proof of residence and identity.
• Copy of bank account passbook.
• Medical letter issued by the doctor or hospital stating the health issue – the severity of the injury, type of illness, the cause of injury, etc.
• In case of disability, a disability certificate issued by the relevant government authority.

The waiver of premium rider is introduced keeping in mind the policyholder’s earning capacity will decrease in the event of disability, death, or critical illness. It will increase your overall premium cost, but it would be surely worth every penny when the need arises to file a claim.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.