Life Insurance Quotes

Waiver of Premium Definition

The Dictionary of Insurance Terms and Definitions

Waiver of premium is a provision in life insurance (usually implemented by a rider) which gives the policy owner a pass on paying premiums under certain circumstances.  What this usually boils down to is that if the policy owner becomes disabled, then he/she will not be required to keep paying premiums, though the policy's life insurance coverage will still persist, just as though premiums had been paid.

A waiver of premium provision may only implement a partial waiver.  That is, a premium may only be reduced instead of completely waived.  For instance, when a policy owner becomes disabled, the premiums may be reduced fifty percent or so, in order to facilitate their payment under the policy holder's straitened finances.

You might well imagine that a waiver of premium rider has the potential to increase the cost of your policy substantially, so it's worth analyzing whether such a provision is even worth having.  If you're going to become disabled, is continued life insurance coverage really what you need?  You might do better to get disability insurance and upon its payment, simply discontinue your life insurance.  Another alternative is a disability rider, which augments your life insurance policy by providing coverage for disabling, non-lethal events.

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