What is a waiver of premium?

When you take out a life insurance policy, it’s vital you keep up with the monthly payments. A missed payment could mean your policy is cancelled. But what if you can’t pay because you’re ill or seriously injured and unable to work?

That’s where a waiver of premium comes in – depending on your circumstances, it could help protect your policy.

When you take out a life insurance policy, it’s vital you keep up with the monthly payments. A missed payment could mean your policy is cancelled. But what if you can’t pay because you’re ill or seriously injured and unable to work?

That’s where a waiver of premium comes in – depending on your circumstances, it could help protect your policy.

Debbie Thompson
Life insurance expert
4
minute read
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Posted 6 JANUARY 2021

What is a waiver of premium?

A waiver of premium is a type of add-on cover, also called a ‘rider’, that can be added to your life insurance policy.

It can cover your monthly premiums if you can’t work because you’ve been seriously injured or are critically ill. The waiver of premium benefit rider keeps your life insurance policy active, giving you peace of mind that you’re still covered during difficult times.

Think of a waiver of premium rider as insurance for your insurance policy.

Just bear in mind that adding a waiver of premium clause could push up the cost of your premium.  

Also, it doesn’t cover you if you’re unable to work due to unemployment or redundancy.

Can I add a waiver of premium to my existing life insurance policy?

No, unfortunately not. A waiver of premium rider can only be added at the start of your life insurance policy. It’s not something you can add on at a later date.

How does a waiver of premium work?

If the worst happens, and you need to activate the waiver, you’ll need to apply to your insurance provider. Be aware that you must qualify under the criteria outlined in the terms and conditions of your life insurance policy.

Typically, the qualifying criteria varies between insurance providers. In nearly all cases, you’ll only be covered for serious injury, disability or critical illness which have occurred during the term of your policy, not before you took it out.

You’ll need to provide evidence that you aren’t able to work. Depending on your insurance provider, this could be:

  • A copy of your medical records and a doctor’s report (in some cases this may be a doctor appointed by your insurance provider)
  • A report from an assessor sent by your insurance provider to visit you at home and confirm your situation

What do insurance providers mean by ‘unable to work’?

Insurance providers tend to have a different definition of ‘unable to work’. That’s why it’s so important to read the terms and conditions before signing up for a waiver of premium rider.

Some insurance providers will let you claim if you’re unable to perform your usual job. Others will only give you the waiver if you’re unable to work in any type of job.

In some cases, insurance providers will assess the level of tasks you’re unable to do. For example, everyday activities, like walking, climbing stairs, bending, getting in and out of a car, and even writing.

Check the terms and conditions carefully, so you know exactly what their definition is for ‘unable to work’ and ‘disability’.

How long does a waiver of premium last?

Typically, a waiver of premium will last until:

  • You’re able to return to work
  • You no longer meet the ‘disability’ criteria
  • The term of your life insurance policy ends
  • You reach retirement age – usually 60-65

Do I need a waiver of premium rider?

Before you buy a waiver of premium rider, check any other types of protection insurance you have. For example, income protection insurance should pay some of your income, so you shouldn’t need the waiver to cover your life insurance payments.

What else should I look out for?

It’s important to remember that every insurance provider is different. When you compare waiver of premium policies, here are some things to look out for:

  • Waiting period – you’ll typically have had to be ill or disabled anywhere from four weeks to nine months before the waiver kicks in, so make sure you can cover monthly payments during that time.
  • Exclusion period – some insurance providers won’t cover the first six months after the start of the policy.
  • Age limit – different insurance providers set different ages for when the waiver of premium will no longer be valid – usually between 60 and 65.
  • High-risk jobs – you might not be able to take out a waiver premium rider if your work is considered risky or hazardous.

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If you’re looking for life insurance, we can help you compare a range of policies to suit your needs. Use our simple life insurance calculator to help you work out how much cover you might need.  

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