North America, Uncategorized, United States

Premium Waiver

Premium Waiver insurance covers certain life insurance policy. This policy covers situations you were disabled or were retrenched from your job and left unable to pay your premium. This means that your policy continues to provide you with the same cover as if you were still making your payments.

You can proceed to apply for Premium Waiver insurance to waiver premiums for the following MLC Life Insurances:

What is premium waiver in life insurance plans?

The feature of Waiver of Premium in a life insurance policy ensures that the policy does not end or become inactive even after the death of the policyholder or due to inability of the policyholder to pay the premium.

Waiver of Premium can either be a part of the policy as an in-built feature. It can also be optionally added as a rider.

One of the most important conditions for a life insurance policy to remain active or in-force is that the policyholder has to keep paying the premium on or before the due date. By paying the premium, the life insurance contract between the policyholder and the insurance company remains valid.

In a conventional life insurance policy, on the death of the policyholder within the stipulated period, the death benefit is paid to the nominee and the plan ends. However, this at times may not always be the case.

In some life insurance policy, on the disability leading to non-payment of premium or death of the holder. The policy does not end, instead the insurance company continues the plan by paying the premium into the policy. This is true only in those life insurance plans that have the unique benefit called ‘premium waiver’. The Waiver of Premium benefit present in a life insurance policy ensures that the policy does not end or become inactive even after the death of the policyholder or due to inability of the policyholder to pay the premium.

The extent of the policy

The policy can be a part of the plan as an in-built feature. It can also be optionally added as a Waiver of Premium rider. If Premium waiver feature exists, then on policyholder’s disability or on death, the future premium payment to the insurer is waived and the policy runs its original tenure with all other policy contracts remaining the same.

In the event of disability, most insurance plans with Premium Waiver benefit will waive off the exclusive in case of permanent or total disability of the policyholder. During such an event, the earning capacity of the policyholder falls and hence such a feature helps in keeping the insurance policy active. Waiver of Premium as an inbuilt feature is mostly found in children insurance plans. Premium waiver can also be attached as a rider to a term insurance plan to take care of future premium after a permanent disability.

Note that income Protection insurance offers a separate premium waiver feature.

Premium waiver benefits.

A benefit wherein the future premium by the insured are waived under certain conditions is called premium waiver benefit. This benefit can be availed normally in the event of accident, disability or death of the person who was paying the premium. This is when the insured is incapable of paying premiums due to his loss of revenue.

Usually insurance policies include the premium waiver clause. Also, in some cases an extra fee is charged to attain waiver of premium benefit. The policy rider is beneficial in the event of any unforeseen exigency resulting in a complete or substantial loss of income to the insured. In this case, the policy will not lapse even if the premiums cease. The rider however entails some cost in the form of increased premiums.

Do you need Premium Waiver insurance?

You may want to consider this type of insurance if you already have an insurance policy to protect yourself from being unable to pay your premium and you:

  • Have a partner, family or dependents.
  • Do you have a mortgage or any other personal debt.
  • Have a business or are self-employed.
  • Would need money to live if you were unable to work.
  • Don’t have significant savings to cover unexpected expenses.

When will premiums be waived?

Premium may be waived in the following circumstances:

  • If you’re suffering a total and permanent disability for the period of up to age 65.
  • If you’re retrenched premiums will be waived for 12 months. This is so as long as you’ve had this insurance and been with the same employer, on a full-time basis, for at least one year. Your premiums will be waived due to retrenchment only once in any five-year period. Also any Income Protection insurance premiums on your policy, or
  • If you suffer Total Disability. If you remain Totally Disabled for more than three months, premiums will be waived after three months while you are Totally Disabled, up to age 65.

For this policy under Income Protection insurance:

  • You don’t have to pay Income Protection Premiums while the insurer are paying the benefits.