What Is a Waiver of Premium for Disability?

What Is a Waiver of Premium for Disability?

Waiver of premium for disability is a provision in an insurance policy that states the insurance company will not require the insured to pay the premium if they are seriously injured. Two types of insurance policies that commonly include a waiver of premium for disability are life insurance and disability insurance. Waiver of premium for disability is a provision in an insurance policy that states the insurance company will not require the insured to pay the premium if they are seriously injured. Waiver of premium for disability is a provision in an insurance policy that comes into play if the insurer becomes unexpectedly disabled and cannot pay their policy's premium. Experts advise that an insured person contact an attorney, if a claim is denied based on non-payment of premiums or the insurance company, declared the decedent not disabled as defined in the policy. Usually, a person is considered totally disabled if they can't perform the duties of an occupation for which they are qualified by education, training, or experience.

Waiver of premium for disability is a provision in an insurance policy that comes into play if the insurer becomes unexpectedly disabled and cannot pay their policy's premium.

What Is a Waiver of Premium Disability?

Waiver of premium for disability is a provision in an insurance policy that states the insurance company will not require the insured to pay the premium if they are seriously injured. Insurance companies can vary in their definition of a disability, and policies can vary on when and for how long they will waive a premium in the event of a disability. It is important to note that insurance companies may charge a higher premium to include this waiver in the policy.

Waiver of premium for disability is a provision in an insurance policy that comes into play if the insurer becomes unexpectedly disabled and cannot pay their policy's premium.
Insurance companies may charge more for a policy with a waiver of premium for disability attached to it.
The definition of "totally disabled" is not uniform and may vary depending on the insurance company and policy.
However, illness or injury must occur and cause the disability, and typically the insured is considered to be "totally disabled" if they can't do their jobs.

How a Waiver Of Premium For Disability Works

Two types of insurance policies that commonly include a waiver of premium for disability are life insurance and disability insurance. The waiver can mean the difference between the insured being able to keep the policy or having to give it up if they become disabled, is unable to work, and no longer has an income.

This waiver is particularly important for disability insurance because if the insured had to pay premiums after becoming disabled, they would not be protected against the peril they were trying to insure against.

Usually, this waiver applies retroactively to the beginning of the disability. If the insured made premium payments while the waiver was in effect, those premiums are usually refunded to the insured in full. Many insureds choose to have this rider attached to their policy because, in the event of a disability, it allows the policy to continue functioning normally on all fronts, including the death benefit, dividends, and cash values. When the disability ends, the policy owner starts making premium payments again.

Issues can arise if an insurance company denies a life or disability insurance claim based on non-payment of premiums because of the insured thought that the waiver of premiums was in effect. How the provision functions vary by contract, and every life insurance policy defines "totally disabled" differently.

Experts advise that an insured person contact an attorney, if a claim is denied based on non-payment of premiums or the insurance company, declared the decedent not disabled as defined in the policy.

Example of a Waiver of Premium Disability

Usually, a person is considered totally disabled if they can't perform the duties of an occupation for which they are qualified by education, training, or experience. An injury or sickness must cause the disability in question. 

For example, if Alex sells cars, their duties include speaking with customers about buying cars. If an injury or illness prevents them from being able to handle this and other related duties, they will usually be considered disabled. If Alex has a waiver of premium disability and the insurance company defines them "totally disabled", they will be able to utilize the waiver.

Related terms:

Disability Income (DI) Insurance

Disability income (DI) insurance provides supplementary income in the event of an illness or accident that prevents the insured from working.  read more

Disability Insurance

Disability insurance is a type of insurance that will provide income in the event a worker is unable to perform their work due to disability.  read more

Hazardous Activity

Hazardous activity is a hobby or pursuit which falls under an insurer's definition of high risk and could prevent a person from coverage approval. read more

Life Insurance Guide to Policies and Companies

Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insured’s beneficiaries when the insured dies. read more

Premium

Premium is the total cost of an option or the difference between the higher price paid for a fixed-income security and the security's face amount at issue. read more

Rider

A rider is an insurance policy provision that adds benefits to or amends the coverage or terms of a basic insurance policy. read more

Introduction to the Waiver of Premium for Payer Benefit

A waiver of premium for payer benefit clause says that an insurance company will not require a fee to maintain the policy under certain conditions. read more

Waiver

A waiver is a legally binding provision where either party in a contract agrees to voluntarily forfeit a claim without the other party being liable. read more

Waiver of Premium Rider

A waiver of premium rider is an insurance policy clause that waives insurance premium payments if the policyholder becomes critically ill or disabled. read more