The waiver of future premiums as its name says is a feature through which the future premiums of your term insurance policy are waived off. This ensures that your term insurance policy does not become inactive or end due to the inability of the policyholder to pay the premiums.
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Let us learn more about this feature to understand it:
The most important aspect of any insurance policy to remain in force or active is its premium payment before its due date. In a regular term insurance plan, the death benefit is provided to the nominee in case of demise of the policyholder during the policy term. However, this might not be the case always, as there can be situations when a policyholder may become unable to pay the premiums. In that case waiver of premium, the feature comes into the picture.
Some insurers offer the term plans with the in-built feature of waiver of future premiums whereas some insurers provide this feature as a rider/add-on benefit. If this feature exists in your term insurance policy, then the premiums are waived off in case of your disability to pay the premiums. Additionally, the policy runs as it is with the same terms and conditions.
As mentioned, a term insurance policy provides financial protection in case of the unfortunate demise of the policyholder and for that, the policyholder has to pay the premiums regularly. If due to some unforeseen condition like permanent disability, you become unable to pay the premiums, the policy will be in force. Here are some key points to support the thought that a waiver of future premiums is necessary:
Provides Protection Against Various Uncertainties of Life: Life is full of uncertain events. You plan for one thing, and something else happens. Therefore, due to some uncertain event of life, if you become unable to pay the premiums of your term insurance policy, the waiver of premium feature protects you.
Affordable Premiums: Some policies offer a waiver of premium as an in-built feature, but if your term plan does not have that, you can buy it as an add-on. A rider or add-on is an additional benefit that you can add to your term insurance policy to enhance its inclusions. If you have to add a waiver of premium rider in your base term insurance policy, you have to pay an additional premium, which is available at very affordable rates.
Policy Does Not Lapse: Waiver of premium ensures that your policy does not lapse even if you become unable to pay the premiums. So, if your term plan has the in-built feature of waiver of premium or if you have added it in your base plan, then all the future premiums are waived off. The insurance provider itself pays the future premiums and ensures that the nominee gets the policy benefits without its discontinuation.
Tax Benefits: Buying the waiver of future premiums rider as an add-on also attracts tax benefits. The premiums that you pay towards this rider are tax exempted under section 80C of the Income Tax Act, 1961. The maximum tax exemption that you can avail of for term insurance riders is Rs.1,50,000.
Eliminates the Requirement of Buying Another Policy: The waiver of future premiums feature eliminates the need of purchasing another policy as it ensures that the policy continues even when the policyholder becomes unable to pay the premiums. In this way, you are not required to buy another policy for ensuring financial security for your family in case of any unfortunate event in the future. Your term insurance policy continues and your nominee gets all the benefits.
Due to the numerous benefits offered by waiver of future premiums feature in your term insurance plan is always recommended, if it does not have it. Having this feature makes your term insurance policy more comprehensive and gives you peace of mind that your family does not have to bear the financial losses even when you become unable to pay the premiums.
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