Can you explain to me what is waiver of premium term life insurance?

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Asked June 12, 2013

1 Answer

In life insurance, a waiver of premium is where your premiums continue to be paid for you if you are disabled or unable to pay your premiums yourself for a period of time. In most cases, a waiver of premium is not permanent, but only lasts for a specified period of time.

In term life insurance, you typically purchase a waiver of premium rider rather than the waiver being automatic as it is in a policy with the waiver built in and a cash value to deduct the premiums from. You pay a small amount more on your premiums, and in exchange your policy is protected against lapses. How much you have to pay for the waiver depends on the company you buy the policy from, the term of the policy, and other factors such as the nature of your inability to pay.

Waiver of premium riders will not protect you from all the problems which could prevent you from making regular payments, but it is a step in the right direction. When you see that you are not going to be able to make a premium payment and the reason is within the scope of the rider, contact your insurance company and make arrangements as early as possible.

Another option that you can use instead of purchasing a waiver of premium policy is to purchase a second type of insurance, known as disability insurance. In addition to keeping insurance policies current, disability insurance will also pay your regular bills, cover medical costs, and may even make cash payments directly to you for use in other costs such as buying groceries. However, statistics show that a majority of people are temporarily disabled for a period of time during their working career, so having this type of coverage is very important for a majority of people, whether they have term life insurance that needs to be protected or not.

Answered June 12, 2013 by Anonymous

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