Life insurance coverages can be tailored with riders in order to better serve the interests of the insured and safeguard their beneficiaries. A premium waiver is an example of such a rider. It helps the policyholder avoid the termination of their insurance in the event that they become incapacitated and are unable to continue making premium payments.
In these circumstances, life insurance regulations can be complicated and must be handled carefully to prevent claim denial.
So, what exactly is a Premium Waiver Benefit?
A premium waiver clause is a common feature in group insurance plans. It offers life insurance benefits in the case of a severe disease, a major injury, or complete disability and exempts the policy holder from premium payments. This prevents the insured's life insurance policy from terminating.
So, a disabled individual who has premium waiver benefits may receive life insurance coverage equal to the amount present before the disability. The insured must submit an application or a request to the insurer within the policy's specified deadline to obtain this benefit.
How It Works
Every life insurance policy is unique, and each policy may have distinct premium waiver requirements. The majority of life insurance firms that offer the waiver require medical documentation from the policyholder's doctor attesting to their total impairment. They may also impose additional conditions, such as age and the duration of the disability.
If someone lost the ability to work completely, they should review their policy to see if they are eligible for a premium waiver benefit. The most common requirements are listed below:
- The disability was a result of an accidental injury or disease
- The disability lead to the insured not being able to work
- The affected policyholder is under the age of 60
- The insured has been disabled for 6 months before the premium waiver benefit claim was filed. This elimination or waiting period differs for every life insurance firm.
The insured can keep their life insurance policy going without any further payments if these and any other applicable conditions are satisfied.
However, the insured must provide proof of complete impairment for at least the initial two years in order to keep getting this benefit. After two continuous years of complete disability, a lot of insurance companies won't demand this proof.
Keep in mind, you do not receive the premium waiver benefit automatically. You need to apply for it and are required to provide proof. Additionally, the insurance benefit under this rider will not keep going forever and will end.
When Does the Premium Waiver Benefit End?
When an insured person isn't completely disabled anymore or fails to provide the necessary documentation to maintain their total disability, their coverage under the premium waiver benefit will expire. It may also end if the insured person retires or becomes 70. You can better understand the circumstances under which your life insurance coverage may end by reviewing the policy.
Since maintaining life insurance under premium waiver benefits necessitates submitting extensive paperwork and going through numerous medical examinations, people with disabilities sometimes lack the energy and time to fulfill the criteria, which may lead to coverage termination.
In other circumstances, insurance employers and firms misplace essential documents, misinterpret provisions of the policy, and are unable to process the application properly.