Waiver of Premium for Disability

Updated on 2023-08-29T11:55:46.980869Z

What is a Waiver of Premium for Disability?

A waiver of premium for disability is a clause in an insurance policy under which insured do not need to pay insurance premium to the insurance firm if they are seriously injured. As one of the most important condition of any insurance policy is that insurer or policyholder need to keep paying the premium on or before the due date for contract to remain valid. But in some policies, if the policyholder met with an accident which leads to disability or his death, and the policyholder can’t pay premium before the end of policy term, the policy does not become void. Instead, the insurance firm continues with the plan by paying the premium into the policy.

This benefit is only available for the policy that have the unique benefit knows as Waiver of Premium, it can be a part of policy or can be optionally added as a waiver of premium rider. But insurance firm can charge higher premium to include this option.

A policy with waiver of benefit does not end even in the case of death or disability of the policyholder and the original tenure and clauses remain the same. However, the definition of disability and how long they will waive a premium in case of death or disability may vary among insurance companies and policies.    Most insurance plans with waiver of premium benefit waives of the premium in case of total disability, in which policyholder can’t do their job and losses earning capacity.

How a waiver of premium for disability works

Commonly, Life insurance and disability insurance policies include Waiver of premium for disability clause. The waiver is the difference between the policyholder paying the premium or giving it up if the policyholder is not in a condition to earn and pay premium.     

The benefit is usually for the disability insurance as if the policyholder has to pay premiums even after disability, they would not be protected against risk they were trying to get protection from. The waiver generally applies retroactively in the start of disability and in case the policyholder still made premium payment while the waiver was effective the premium amount is refunded to insured in full. If the disability ends the policyholders need to start making premium payment again.

The policyholder should carefully look if the policy includes waiver of premium clause in their policy and if it is effective as insurance firm may deny waiver claim based on non-payment of premiums. If the insurance firm denies waiver claim the policyholder may contact his attorney. 

If a parent start an insurance plan without Waiver of premium for their child until a certain age to save for their future and if the policyholder dies before the policy ends the amount assured and the fund value or bonus is paid to the nominee and the plan ends. On the other hand, a plan with waiver of premium does not end in case of death of the policyholder and the sum assured is paid to the nominee after the desired age. 

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What is Total disability?

Every insurance firm and policy define total disability differently. But generally total disability can be defined as when a policyholder can’t perform the duties of his job for which they are qualified by experience, education or training and the injury or sickness must cause disability.

For example, James is a dancer by profession and due to some injury or illness he can’t dance anymore and can’t handle any other related duties. He will be consider as totally disabled. If James has an insurance policy with waiver of premium and the insurance firm defines them totally disabled they will be able to claim the waiver.   

Is Waiver of Premium for disability is a good option for you?

If you want to protect your family financially for any uncertain condition such as disability, a policy with waiver of premium can be the smart choice. But, if your profession is risky, such as military work or police or you enjoy hobbies like mountain climbing or skydiving you may not be able to qualify for an insurance policy with Waiver of premium.

Are you eligible for waiver of premium?

No, if you already have a disability, you can’t be eligible for waiver of premium rider.