Waiver Of Premium | Everything About Term Insurance- Waiver Of Premium

Nowadays, term insurance is a necessity that offers protection to your family in case of an unforeseen event. As we all know, uncertainties can come to your life anytime anywhere, leaving you worried about your loved ones. If you are diagnosed with some critical illness or are suffering from total and permanent disability caused because of an accident or death, the waiver of premium riders acts as a savior for you.

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Term Insurance With Riders 

Term insurance is a pure protection plan that provides a death benefit to the policyholder’s family in case of any unfortunate event. A term plan with extra benefits can strengthen your policy but is quite expensive. Term insurance Rider, the additional benefit, is an attachment to the policy that enhances the coverage by paying higher premiums. Opting a distinct rider with your term insurance plan enhances your coverage and marginally increases the charges of premium which depend on the type of rider chosen by the policyholder. Different types of riders are available for term insurance such as critical illness, waiver of premium, accidental death, and partial and permanent disability. 

What Are The Other Disability Riders? 

Other riders are also available that provides financial protection in case you become ill or disable: 

  • Critical Illness Rider – In this, a lump sum amount is paid to the policyholder to cover the treatment expenses, if you are diagnosed with the critical illness (as mentioned on the company’s brochure). 
  • Disability Rider – A monthly income is paid to the assured in case of disability. 
  • Accelerated death benefit rider – This rider pays some of the amounts as a death benefit if you are alive and you are diagnosed with some terminal illness. 

Term Insurance Waiver Of Premium Rider 

A waiver of premium rider is a benefit where the future due premium payments are waived off by the insurance company under certain conditions. This rider can be availed in case of total and permanent disability, accident, or death of an individual who is paying the premiums (policyholder). It is beneficial when the life assured is not able to pay premiums because of the revenue loss. This benefit can be attached with a policy or taken as an in-built feature or sometimes, insurers provide an option to add waiver of premium rider to your respective policy. So, this benefit surrenders all the future premiums in case of disability or death. So, this rider lessens the financial stress to pay all the future due premium in case of the unforeseen demise of the sole earner of the family. The eligibility of availing this rider is from 18 years - 65 years. 

In life insurance and term insurance policy, the existence of this waiver of premium benefit ensures that the policy is still active even after the death of the policyholder. If the policyholder is suffering from disability caused due to an accident, then most insurers with this benefit waive off all the premium amount. In such situations, the policyholder’s capacity of earning falls, and this feature keeps the policy active. Waiver of Premium rider is commonly found in the case of child insurance plans.  

How Waiver Of Premium Benefit Works? 

The term insurance waiver of premium Rider allows you to be stress-free for premium payments in case of disability or if you are not able to work for 6 or more months. To activate the rider, you are required to submit a disability claim to the insurance company. It is also required that you pay your premiums at the time of the waiting period i.e., the time between your disability and your rider activation. If the insurer approves the claim for the waiver, then they refund the paid premium during that period. This benefit covers your premiums till the age of 65 years and when the disability ends, you can resume your policy again and start paying the premiums. 

Let’s understand this with the help of an example, every parent wants their child’s future to be secure and financially stable and they wish their child to collect a large amount of money at the right age and right time. If Ram wants his savings to be Rs. 40 lakhs for his 5-year-old daughter. He wants to invest and save money for her future when she reaches 20 years of age. In case if Ram dies due to some unfortunate event during a policy term (without Waiver of Premium Rider), then the nominee receives the sum assured amount and the bonuses i.e., fund value as well. However, in Waiver of Premium Benefit, the plan continues smoothly even afterward the policyholder’s death. The sum assured is paid by the insurer to the beneficiary/nominee and premiums are also paid by the insurance company on the last date.

Benefits Of Waiver of Premium  

  • If an individual paying the premium is diagnosed with a critical illness such as heart stroke, cancer, or other mentioned on the company’s brochure and dies in between the policy term. In such situations, the waiver of premium benefit helps the nominee to pay all the future due to premiums. 
  • All the future premiums will be waived off with the help of this benefit in case of policyholder’s death, permanent and total disability. The nominee will not be responsible to pay any premiums in such cases. 
  • Get the tax benefits as per the prevailing tax laws on paid premiums against the term insurance. The exemption of up to Rs. 1,50,000 are allowed u/s 80C of the Income Tax Act, 1961. 
  • Waiver of premium benefit ensures that the availed policy will not lapse in case of an unforeseen event. 

Documents Required For The Claim Settlement Process 

For a smooth claim settlement process, the following documents are required to be suited to the insurer. 

  • For Critical illnesses and Disability 
  • Filled claim application form 
  • All the policy documents (original)
  • Residential address of policyholder 
  • ID proofs 
  • Copy of bank passbook
  • Certificate of disability from an authorized government hospital 
  • Medical statement of a doctor stating the health condition 

Exclusions Of The Waiver of Premium Rider 

  • HIV/AIDS
  • Any kind of congenital infection or disease
  • Nuclear attack or contamination 
  • Participation of assured in any criminal activity
  • Injury due to adventurous sports or hazardous activities.
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Wrapping It Up! 

Life is unpredictable and any uncertainty can occur anytime anywhere. It is better to be prepared for any unforeseen event. Riders are additional benefits that enhance the policy coverage by paying minimally higher premiums. The premium of waiver benefit is one of the common benefits in which all the future premiums are waived off in case of death or disability of the policyholder. This rider reduces the financial burden on the family in such cases. One should always be aware of all the features and benefits of the policy and riders. Choose smartly for a better tomorrow.

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