Q

What is a waiver of premium rider?

A

If you become disabled and can’t pay your life insurance premiums, a waiver of premium rider keeps your policy active.

Nupur GambhirAmanda Shih author photo

By

Nupur Gambhir

Nupur Gambhir

Life Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius and licensed Life, Health, and Disability agent in New York.

&

Amanda Shih

Amanda Shih

Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Jetty, and J.D. Power.

Updated July 13, 2021|4 min read

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Adding riders to your life insurance policy allows you to customize your coverage and strengthen the financial safety net your policy provides to your loved ones. A waiver of premium rider protects your life insurance coverage from lapsing if you become disabled and can no longer pay your policy’s premiums.

With a waiver of premium rider, you won’t need to make your premium payments—they are waived for the duration of your disability. However, the rider is often difficult to qualify for and offers less financial support than a disability policy. Most people should buy disability insurance to protect their income instead of a waiver of premium rider.

Key Takeaways

  • Riders offer additional coverage to enhance your life insurance policy

  • A waiver of premium rider covers your policy premiums if you become disabled

  • You need to meet disability qualifications set by your insurer to activate the rider

  • A standalone disability insurance policy offers more coverage that’s easier to qualify for than a waiver of premium rider

How does a waiver of premium rider work?

The waiver of premium rider allows you to forgo premium payments if you become disabled and cannot work for six months or more. The waiver can’t be added to an existing policy, and it doesn’t cover pre-existing conditions.

To activate the rider, you submit a disability claim to your insurer. You must pay your premiums during the waiting period, the time between your injury and when your rider benefits begin. If you qualify for the waiver, you’re refunded any premiums you paid during the period. 

Your premiums are covered as long as you’re disabled, up to a certain age (usually age 65). Once the disability ends and you can work again, you resume making payments.

While most life insurance companies offer waiver of premium riders for disabilities, some also offer the rider for unemployment. Similar to a waiver of premium rider for a disability, a waiver of premium for unemployment keeps your policy from lapsing if you are out of work.

How much does a waiver of premium rider cost?

The waiver of premium rider is a flat fee added to your premium payments and remains the same throughout your policy. Based on July 2021 Policygenius data, the rider can cost an extra $10-50 per month. 

But, just like premium payments, the amount you pay for the rider is determined by your insurer, age, and health classification. The cost is calculated alongside your policy premiums when you go through the underwriting process.

What is the waiting period for a waiver of premium rider?

The waiting period between an injury and when your premiums are waived is also called the elimination period.

Most providers have a waiting period of six months, but it’s different for each life insurance company. The table below shows the waiting period for life insurance companies offered in the Policygenius marketplace.

LIFE INSURANCE COMPANYWAIVER OF PREMIUM WAITING PERIOD
AIG6 months
Banner Life (William Penn in New York)6 months
Brighthouse6 months
Lincoln Financial4 months
Mutual of Omaha4 weeks for unemployment, 6 months for disability
Pacific Life6 months
Principal6 months
Protective6 months
Prudential6 months
SBLI6 months
Symetra6 months
Transamerica6 months

Methodology: Information based on policies offered by Policygenius as of August 2021.

How do you qualify for a waiver of premium rider?

Qualifying for a waiver of premium rider is usually difficult. Your disability must fall within the insurance company’s definition of disability and you must be under the waiver’s maximum age limit.

Meeting the definition of disability usually requires you to have a total disability. For most providers, that means you’re under the regular care of a licensed physician for your injury or illness and: 

  • Able to work but have lost sight in both eyes or have lost two limbs, or

  • Unable to perform any duties of your current occupation (for an initial period)

  • Unable to perform the duties of any occupation for which you’re reasonably qualified (after the early years of your disability)

Each insurer sets their own rules about how to qualify and which injuries the rider won’t cover, so check with your provider for specifics.

Age limits on waiver of premium riders

Some insurers have age limits on who can use the waiver of premium rider, while others are more flexible. The table below shows the age limit for Policygenius’ partner life insurance companies. An N/A means the insurer does not have an age limit.

LIFE INSURANCE COMPANYWAIVER OF PREMIUM RIDER AGE MAXIMUM
AIG65 years old
Brighthouse65 years old
Banner Life (William Penn in New York)65 years old
Lincoln Financial65 years old
Mutual of OmahaN/A
Pacific Life65 years old
Principal65 years old
Protective65 years old
PrudentialN/A*
SBLI65 years old
SymetraN/A
TransamericaN/A*

*If the disability occurs before age 60.
Methodology: Information based on policies offered by Policygenius as of August 2021.

Some applicants may not be eligible to add on a waiver of premium rider to their policy due to age.

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Is a waiver of premium rider worth it?

One in four people become disabled throughout their careers, making buying additional disability coverage an important precaution. But, most people are better off buying a disability insurance policy instead of adding a waiver of premium rider to a life insurance policy. 

A long-term disability insurance policy can pay monthly benefits equal to approximately 60% of your income. Those benefits will help you cover all of your bills and expenses, not just your life insurance premiums. In comparison, it can be difficult to qualify for a waiver of premium rider, and it offers no income protection.

What other disability riders should you add to your life insurance policy?

A waiver of premium rider is just one of the riders to consider for your life insurance policy. Other riders also provide financial assistance if you become seriously ill or disabled:

  • Accelerated death benefit rider (ADB)An ADB rider is included for free in most life insurance policies. The rider pays out some of the death benefit while you are alive if you are diagnosed with a terminal illness. 

  • Critical illness rider — The rider pays a lump sum out of the death benefit to cover treatment costs if you are diagnosed with a critical illness.

  • Disability income rider — Offered only by select insurance companies, a disability income rider pays a monthly stipend to replace your income if you cannot work due to a disability.

  • Waiver of premium for payor — If you’re buying a policy to insure someone else (like your child), this rider waives premiums if you become disabled or are otherwise unable to pay.

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Speaking to an independent insurance agent or certified financial planner is the best way to determine which insurance plans and riders are best for your family’s financial needs.

Frequently asked questions

Do I need a waiver of premium rider?

Most people should purchase a standalone disability insurance policy instead. A waiver of premium rider protects your policy from lapsing if you can no longer pay the premiums, but it can also be costly and difficult to qualify for.

What is the waiting period for a waiver of premium rider?

Most insurers require that you are disabled and cannot work for six months before activating the waiver of premium rider.

What is the advantage of a waiver of premium provision in a life policy?

Adding a waiver of premium rider to your life insurance policy protects it from lapsing if you become disabled and can no longer work or pay your life insurance premiums.

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