Adding riders to your life insurance policy allows you to customize your coverage and strengthen the financial safety net your policy provides to your family. A waiver of premium rider protects your policy 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.
How does a waiver of premium rider work?
The waiver of premium rider allows you to forgo premium payments if you become disabled and can’t work for six months or more. The waiver doesn’t cover disabilities caused by pre-existing conditions.
To use 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.
Most providers have a waiting period of six months, but you should check with your life insurance company to confirm. If you qualify for the waiver, you’re refunded any premiums you paid during that period.
Your premiums are covered as long as you remain disabled. Once the disability ends and you can work again, you'll 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 prevents your policy from lapsing if you’re out of work.
How much does a waiver of premium rider cost?
The waiver of premium rider is a flat fee that is added on to your premium payments and remains the same throughout your policy. Based on Policygenius data, the rider costs an extra $10 to $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.
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:
You’re able to work but have lost sight in both eyes or have lost two limbs, or
You’re unable to perform any duties of your current occupation (for an initial period), or
You’re 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. You should 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. Companies that have age limits usually cap the rider at 65 years old.
Some applicants may not be eligible to add on a waiver of premium rider to their policy due to age.
Is a waiver of premium rider worth it?
One in four people become disabled throughout their careers, so buying additional disability coverage is an important precaution.
However, most people are better off buying a standalone 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.
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.