Everything You Should Know About Waiver of Premium Rider

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Are you looking for some extra peace of mind when it comes to your life insurance policy?

If so, you may want to consider adding a waiver of premium rider. If you get sick or hurt and can’t work anymore, this addition can give you some much-needed financial security.

Keep reading to learn more about what a waiver of premium rider is and how it can benefit you. We’ll also share with you how you can build a stable financial system by leveraging your life insurance policy.

What Is a Waiver of Premium Rider?

A waiver of premium rider is an insurance policy provision that allows the policyholder to stop making premium payments if they become disabled and are unable to work.

A waiver of premium rider can be an important financial safety net for people who can’t work and can help make sure that their family is still protected if they die or become disabled.

Who Qualifies For a Waiver of Premium Rider?

A waiver of premium rider is usually available to adults aged 18 to 60 or 65 who have no history of disabilities. Eligibility also depends on overall health and lifestyle.

For instance, if you’ve exceeded a certain maximum age limit or you work at a high-risk job, most insurers won’t offer you a waiver of premium rider. .

Before adding this rider to your policy, you should know that each life insurance company may have its own rules.

For example, insurance companies use two definitions for life insurance policies: own occupation and any occupation.

In the case of your own occupation, you will qualify for a waiver of premium rider if your disability means you can’t perform work in your field. Then, the insurer will waive your premiums even if you take a normal job in a similar field.

But, in the case of any occupation, your qualifying disability prevents you from doing any work.

Let’s say you work in a factory and you have badly injured your hand while working on a machine. You are no longer able to do that job, but you can teach online language classes. This means that you can only get a waiver of premium disability rider if your insurance policy fits the description of your job.

Now that you know the main criteria for eligibility, let’s see what is required to activate a waiver of premium rider. .

How Does a Waiver of Premium Rider Work?

If you become disabled at any time during the term of your policy, your insurance company will not charge you a premium. This means you can keep getting benefits without having to pay anything, and your death benefit won’t go down.

When you apply for a life insurance waiver of premium rider, you will have to wait an average of six months for approval. During this waiting period (also known as the elimination period), you can’t claim benefits. This means that you keep paying the premiums but also keep the medical documentation that proves your disability.

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After the waiting period is over, your insurance company will approve your claim, waive your premiums, and give you back any payments you made during the elimination period. 

If you apply for the same disability insurance more than once, you won’t have to go through the six-month waiting period again. But in the case of a new short-term disability, the waiting periods will come into effect.

Requirements for a waiver of premium rider

To activate waivers of premium riders,  the insurance companies will ask you to submit: 

  • Physician’s statement – The doctor must give you a statement stating how the disability occurred and that you are no longer able to work
  • Disability Letter – The Social Security Administration (SSA) gives you a disability letter as proof of disability
  • Your physician’s contact information
  • Contact details of your previous employer

Then, your insurance company will look over your claim and make a decision, which usually takes a few weeks.

How Much Does the Waiver of a Premium Rider Cost?

As the waiver of premium rider will provide additional protection to your life policy, you will have to pay an extra price. The rate mostly depends on the insurance company, age limit, and overall health.

On average, the rider will cost roughly between 15% and 25% of your monthly premium.  

Keep in mind that the age limit and overall health can affect the cost of the rider. The younger and healthier you are, the lower the price is. 

Waiver of Premium Rider vs. Disability Insurance

You already know that a waiver of premium rider is an add-on to a life insurance policy that allows the policyholder to waive premiums in the event of a disability.

On the other hand, disability insurance is a separate policy that pays out benefits if the policyholder gets sick or hurt and can’t work.

Waiver of premium riderDisability insurance
Waives your life insurance paymentsProvides you with around 60% to 80% of your income
A waiting period of six months Waiting periods may vary. Short-term disability may require 14 days while long-term 90 or 180 days
Price is added to your monthly premiumIt may be free if you qualify for Social Security Disability Insurance

There are several key differences between these two types of coverage. First, a waiver of premium rider only works with life insurance. Disability insurance, on the other hand, can be bought as a separate policy.

Second, a waiver of premium rider only covers the cost of premiums, while disability insurance provides benefits that can be used to cover living expenses.

Lastly, a waiver of premium rider usually only covers disabilities that happen after the policy was bought. Disability insurance, on the other hand, can cover disabilities that happen before or after the policy was bought.

As you can see, it is important to carefully consider your needs before choosing between a waiver of premium rider and disability insurance.

Even though these options have different purposes, both of them can provide financial coverage in the event of a disability. At least temporarily.

But what about a long-term solution and coverage in case of any event?

Long-term Financial Stability With Over-Funded Life Insurance 

Did you hear about over-funded life insurance?

If not, you’ll be glad to know that you can build your independent financial system by levering your over-funded life insurance policy.

Yes, completely independent from the banks and a system that works for you, not against you.

This is how it works.

Over-funded life insurance is the concept of putting all of your savings into a whole life insurance policy so that you have full control over your finances. It might sound complicated, but with the right education and help, it’s not hard to implement at all.

And the benefits that follow, like not having to pay taxes on the growth inside of the policy and the ability to borrow against your policy at any time, make it all worthwhile.

When you move your savings into a whole life insurance policy designed for over-funded life insurance, you can start to eliminate banks and rely only on your own finances.

This concept, which we call Lifestyle Banking, will allow you to create cash flow, lend money to others, and start family banking.

Whatever situation you find yourself in, you will be adequately insured and financially covered. 

Watch Our Free Masterclass

A waiver of premium rider is a great way to get some extra peace of mind when it comes to your life insurance policy. But if you’re looking for long-term financial security, you will need a strong system you can rely on.

If you’d like to learn more about how to implement over-funded life insurance and become your own bank, make sure to watch our free masterclass. You’re only 90’ away from starting to take control over your finances!