Waiver of Premium

A Waiver of Premium is a provision in an insurance policy that allows the policyholder to stop paying premiums if they become disabled and unable to work. This provision is typically found in life insurance, disability insurance, and long-term care insurance policies. If the policyholder becomes disabled, the insurance company will waive the premium payments for the duration of the disability, allowing the policy to remain in force without interruption.

Key features of a Waiver of Premium provision include:

• Disability requirement: The policyholder must become disabled according to the definition in the policy in order to qualify for the waiver of premium benefit.

• Duration of benefit: The waiver of premium benefit typically lasts for the duration of the disability, up to a certain age or time period specified in the policy.

• Eligibility period: The policy may specify a waiting period before the waiver of premium benefit becomes effective.

• Premiums waived: The provision waives the premiums for the policy covered by the benefit, allowing the policy to remain in force without interruption.

• Cost: The Waiver of Premium benefit may come at an additional cost, in the form of higher premiums.  

Example:  

Let's say John has a life insurance policy with a Waiver of Premium provision. One day, he is involved in an accident that results in a permanent disability. As a result of his disability, he is unable to work and earn an income. Since his life insurance policy includes a Waiver of Premium provision, John no longer has to make premium payments on his policy. The Waiver of Premium provision ensures that John's life insurance policy remains in force and his beneficiaries will receive the death benefit in case of his death.

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