What is a life insurance waiver of premium for disability?
A waiver of premium rider is an optional life insurance add-on that allows you to stop paying your life insurance premium while you're experiencing a qualifying disability. The life insurance disability waiver ensures you won't have a lapse in coverage if you're no longer able to work and pay your premium because of your disability. Depending on your insurer and if you qualify, you may be able to add a disability waiver of premium rider to a new or existing life insurance policy.
How does a waiver of premium disability rider work?
If you have a disability waiver of premium life insurance rider and at some point during your policy term you experience a qualifying disability, your insurer will waive your premium so you can maintain coverage without making payments, and with no reduction to your death benefit. The premium waiver will last until your condition resolves or, if your disability is permanent, indefinitely. If your condition resolves but you later experience the same disability or another qualifying condition, you can use the waiver of premium provision again.
It's common for waiver of premium riders to terminate around retirement age, depending on your policy. If yours terminates and you're still experiencing a qualifying disability, your premium waiver will continue; you simply wouldn't be able to file any new claims for a premium waiver.
Waiting periods for waiver of premium riders
Depending on your insurer and policy, there may be a waiting period between when you purchase your policy and when you'd be able to use the waiver of premium disability rider. This could be a few months to a year. There may also be a waiting period between when your disability begins and when your premium waiver rider can take effect, though your insurer might refund any premium paid during this waiting period once the rider takes effect.
How much is a waiver of premium disability rider?
Adding on a waiver of premium disability rider may increase the cost of your life insurance policy anywhere from 10% to 25% of the original premium. Your exact price will depend on your age, health, policy type, and insurer.
Is a waiver of premium rider worth it?
According to the CDC, around 25% of American adults in 2018 were experiencing a disability that impacted their major life activities, which could include the ability to work. You may need to go on disability leave at some point during your career and thus have a decreased income, particularly if you have an occupation with a higher likelihood of injury. And even if you have a low-risk job, there's a chance you could get hurt or experience a disability outside of work. Having a waiver of premium rider on your life insurance can help prevent a life insurance policy lapse if you develop qualifying conditions.
What are the differences between a waiver of premium rider and disability insurance?
While disability insurance and a waiver of premium rider for your life insurance policy are designed for different purposes, each can help you financially until you're no longer disabled or until you reach a maximum age, typically 65. Both life insurance and disability insurance may be offered by employers as part of their benefits packages, but they can also be obtained independently. However, there are several differences between the waiver of premium life insurance rider and disability insurance:
- Purpose: While a waiver of premium rider simply waives your life insurance payment, disability insurance provides you with around 60% to 80% of the income you were making prior to being unable to work, to be used however you like.
- Timeframe and qualifications: A waiver of premium provision typically only kicks in when you'll be disabled for six months or more. Disability insurance is available for short-term periods, starting around three months, as well as long-term periods. You'll also need to meet different disability-related qualifications for your waiver of premium rider than for disability insurance.
- Cost: Adding a waiver of premium rider to your life insurance policy will increase your life insurance premium. If you've worked recently enough and long enough and paid Social Security taxes on your earnings, you may be able to obtain free Social Security Disability Insurance. That said, disability insurance isn't meant to replace a waiver of premium rider.
Who qualifies for a waiver of premium rider?
Waiver of premium riders are typically available for all types of life insurance policies. Factors that can impact if you're approved include your overall health, pre-existing conditions, occupation and hobbies, and age. Note that younger people who don't have high-risk jobs or hobbies are more likely to be approved for the rider, and most insurance companies don't offer it to anyone over 65. These factors may also impact how much you'll need to pay for the rider.
If you have a waiver of premium rider on your life insurance policy, you'll need to meet certain conditions to activate the waiver. Some waivers can kick in when you experience a disability that prevents you from doing your normal job. However, most policies only allow you to qualify for a waiver of premium if your disability completely prevents you from taking on any job for six months or more.
How to file a waiver of premium claim
To activate your waiver of premium rider, you'll need to initiate a claim through your life insurer and provide the necessary information:
Get a statement from your doctor.
This should provide details on your condition and state that you're unable to work.
Obtain a notice from the Social Security Administration (SSA).
Your waiver of premium claim will be reviewed independently of any disability claims you have with the SSA, but similar to the statement from your doctor, a notice from the SSA may help verify that you can't work due to a disability and therefore may be eligible for a disability waiver of premium.
Complete a claim form with your life insurance company.
Contact your insurance company to file your claim with the above documents and any other required information.
How to get life insurance
You can get a life insurance quote online through Progressive in just minutes. You'll answer some questions, and then you'll choose a coverage amount, term length, and other policy details. You can also call 1-866-912-2477 to speak with a licensed Progressive Life by eFinancial representative who can help you find the right policy for you.