After the COVID-19 pandemic took over the entire globe, many young adults entering the workforce understood how important it is to buy life insurance. A life insurance policy will help you protect your loved ones financially. In life insurance policies, the policyholder pays the premiums for a term insurance plan or other insurance plans to the insurer. If these payments are made regularly, the policy is upheld and provides the policyholder or their beneficiaries with the benefits when required.
However, quite often, one’s base insurance plan cannot cover specific situations like the accidental disability of the policyholder, where they cannot provide for their family anymore and also not cover the remaining premium payments of the policy. But do note that including the rider in your plan will lead to an increase in the premium amount paid every month. Hence, you must learn about the rider quotes before including them in the plan.
As they’re unable to work, they won’t maintain the steady income flow that assisted them in making the premium payments. It is a known fact that if the policyholder misses a premium payment for your life cover plan, the policy will lapse. To combat such situations and ensure that the policyholder can still benefit from the premium payments made until that point, insurers offer the waiver of premium rider.
When is the waiver of premium rider useful?
The waiver of premium can be an inbuilt part of the insurance plan offered by the insurance company, or it can be added as a rider to the base insurance plan. It is beneficial:
- If the policyholder is diagnosed with any critical diseases like heart attack, cancer, etc.
- If the policyholder has been disabled for a minimum of 6 months.
If the policy includes the waiver of premium rider, then it helps waive off the plan’s premium payments while allowing the policy to continue. The rider comes into effect in case of the policyholder’s untimely demise or disablement that affects the policyholder’s earning capabilities.
The waiver of premium can also be added to a term insurance plan as a rider to handle future premiums in the event of a disability.
How does the waiver of premium rider work?
A waiver of premium rider helps keep the policy in effect even after the policyholder is unable to pay the premiums for the policy. For instance, if a parent buys an insurance plan with the aim of providing their child with the desired sum assured, the waiver of premium rider in the plan will help uphold the plan until maturity, even if the parent meets with an untimely demise or disability during the tenure of the policy. Apart from that, it will ensure that the child receives the exact amount at the end of the plan, even though the premium payments have been waived off after the policyholder’s demise.
The insurance company pays the sum assured and also upholds the premium payments on the predetermined dates. This ensures that the child receives the sum assured amount at the proper age.
If a policyholder cannot continue making the premium payments towards an insurance policy, they could lose out on the protective insurance coverage, and the premiums paid until that time would be all for nought. However, with a waiver of premium rider, the policy does not lapse and continues to stay in effect until the plan ends. And when the need arises, the insurer provides the sum assured to the beneficiaries.