Waiver of Premium Rider in a Whole Life Insurance Policy
A popular rider for whole life insurance (and other types of life insurance) is the waiver of premium rider. Waiver of premium is designed to pay the life insurance premiums in the event the insured becomes totally disabled. While it is a valuable benefit in the event of a severe disability, the definition of disability in the waiver of premium is typically far more restrictive than the definition of disability in individual disability income policies. Nevertheless, it can be very useful in certain situations.
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The insurance company will typically require written proof that the insured is totally disabled with a stipulated period of time and that this disability has existed continuously for a period of time, normally about six months. The definition of total disability may require an inability to the bodily injury or disease to perform essentially all of the duties of an occupation. Sometimes the waiver of premium will be a little less restrictive during the first year or two. For example, waiver of premium might state that during the first full 24 months of disability, total disability means that the insured cannot perform essentially all of the duties of his or her regular occupation at the time the disability begins. After this time, the definition of total disability may become more restrictive. For example, it might state that the insured is not able to perform essentially all the other duties of his or her occupation or for any other occupation which the insured is capable of by education experience or training.
Waiver of premium may also consider a younger insured’s occupation to include attending school full-time outside the home.
Waiver of premium may also recognize presumptive total disabilities. In this case, total and permanent loss of sight of both eyes or loss by severance of through or above the wrist or ankle joint of either foot or both hands or one of each. Presumptive disabilities will typically result in the premium being waived throughout the lifetime of the insured.
Age of the Insured
Sometimes the age of the insured can affect the duration of the waiver of premium benefit. The insurance company might say that if a total disability begins before the age of 60, premiums will be waived while the total disability continues. If total disability begins at or after the age of 60, premiums might be waived for the longer period of continued disability of until age 65 or for two years from the beginning of such disability if this two-year period extends beyond age 65.
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Continuance of Waiver
Insurance companies may require (at reasonable intervals) subsequent proof in writing of the continuance of the total disability. Companies may require that the insured is examined once a year by one of its own medical examiners as part of any proof, and the company will typically pay for such exam. Accompanying may not require further proof of disability after age 65 under certain circumstances. For example, they might not require further proof after age 65 if all premiums to between age 60 and 65 have been waived and the disability began before the age of 60 and the disability still exists at the age of 65.
Certain exclusions may apply to waiver of premium. The insurance company may not waive the premium if it became due more than one year prior to the company’s receiving proof of disability. Another exclusion may state that total disability resulting from intentionally self-inflicted injuries will not be covered. Any total disability resulting from acts of war may also be excluded.
Any other riders and the policy may also be waived as the result of the waiver of premium rider being activated.
Note that if a whole life insurance policy is in premium offset, the insurance company will still pay the premium, resulting in more rapid growth of cash value and death benefits.
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