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As a financially responsible person, you take all the steps to ensure your family’s financial future is secure by knowing what is term insurance details and purchasing a term insurance plans that will cover them in the event of an unexpected and unfortunate event. However, unforeseen medical issues may emerge, preventing you from working and supporting your loved ones. At this point, paying insurance premiums becomes a financial burden that they cannot bear.
Fortunately, a solution exists in the shape of a “Waiver of Premium” rider that can be added to a term insurance plans. This rider serves as a safety net, guaranteeing that insurance coverage remains even if the policyholder is unable to pay his or her payments due to illness or accident. By adopting this rider, the policyholder can expand the coverage offered by his or her term insurance policy and get important peace of mind.
When acquiring a term life insurance policy, it is critical to consider all aspects, not just the death benefit. The Waiver of Premium Rider clause can considerably increase the value of a policy. This article will get into the specifics of the rider, such as who qualifies, how it works, and the benefits.
What is a Premium Rider Waiver?
As the name implies, the rider waives any future premiums due on or after the death of the life assured until the end of the rider term. Despite the waiver of premiums, the policy’s benefits remain intact. It is an add-on benefit that you can add to your basic life insurance policy by paying an additional payment.
As per the experts, the premium waiver is important, especially for policies meant for children. In the event of a child policy, the parent is usually the one who pays the premiums. When the premium-paying parent dies, all future premiums are waived until the child reaches the age of 25 or the rider’s tenure (whichever comes first).
The Waiver of Premium Rider ensures that your coverage continues even if you are unable to pay your premiums due to a medical condition that prohibits you from working for a lengthy period of time. This rider aims to cover the costs of term insurance plans in case of severe illness or permanent disability. In the case of a physical disability, this unique rider exempts the life insured from paying any future payments.
How Does the Premium Waiver Benefit Rider Work?
Let us use an example to demonstrate how Premium Waiver Benefit works.
Let’s assume, you research fully about what is term insurance and you bought a child policy with an amount assured of Rs. 5 lakhs and a policy period of 30 years. After 30 years, or on the policy’s maturity date, your child will be entitled to the maturity benefit. If you die during the insurance term, someone else must continue to pay premiums in order to keep the policy active and ensure that the child receives the benefit amount. When you add the Premium Waiver Benefit Rider to your life insurance policy, the insurance company waives future premiums without impacting the proposer’s maturity or death benefit amount.
The insurer pays the agreed-upon amount, continues to pay plan premiums, and then releases the funds on the due date. Premium waivers cannot be activated once you cease working. Most policies have a waiting period in which you must be handicapped for at least three months, and frequently much longer, before you can claim the benefit.
There may also be limitations on your ability to request a premium waiver within the first few months of purchasing the coverage. To successfully activate the benefit, your inability to work must meet the policy’s definition of incapacity. A home inspection or medical report is also required to demonstrate your inability to work.
Benefits of Adding the Premium Waiver Rider in Term Insurance
Keeps your term life insurance coverage active
The primary benefit of including a waiver of premium benefit rider is that it prevents the policy from expiring due to a missed premium payment. It’s important to know that an expired policy cannot be used to file a life insurance claim. As a result, even if the predetermined premium installments have yet to be paid, this add-on function keeps your insurance active.
Keeps your family’s finances safe and secure
You can rest easy knowing that your life insurance policy will remain in effect even if you are unable to pay the premiums due to illness or an accident. You may be confident that your family will be financially secure if you die unexpectedly.
Helps you preserve your savings
This rider function helps to save your valuable savings in times of need. When a major sickness or disability occurs, it can deplete your hard-earned money and make it difficult to maintain your current lifestyle.
Covering your insurance premiums during a disability helps preserve your funds and assets, thus, freeing your family for other vital goals such as your child’s school or retirement. So sit back, relax, and allow the waiver of the premium rider to be your financial rescuer.
What isn’t Included Under Waiver of Premium in Life Insurance Plans?
Some of the exclusions under Waiver of Premium Rider are:
- Suicide by self-inflicted injuries.
- HIV/AIDS
- Congenital infection.
- War, civil commotion, violation of the law, or willful participation in violent activities.
- Alcohol and substance abuse
- Injuries caused by adventurous hobbies.
- Pre-existing medical conditions
- Radioactive contamination from a nuclear accident
Conclusion
To summarize, the waiver of premium riders is an important addition to term insurance plans. It provides you peace of mind knowing that your insurance premiums will be waived in the event of an unexpected illness or injury, allowing you to focus on getting better without being concerned about finances. You can also read is it good to buy term insurance plan for your additional knowledge.
This rider can serve as a safety net for you and your loved ones, ensuring that your insurance coverage remains even in difficult financial situations. Policyholders must consider this rider when purchasing a term insurance plans, as it can provide invaluable protection for you and your loved ones.
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