“Waiver of Premium” and “Waiver of Charges” for a Life Insurance Policy

When a person purchases a life insurance policy many times a benefit (also referred to as a rider) that is over-looked is “Waiver of Premium”, or “Waiver of Charges”.   A “Waiver of Premium” is typically attached to a whole life, or term policy, while a “Waiver of Charges” is attached to a Universal Life policy.  Unfortunately, many agents choose not to introduce this benefit, and most prospective insureds are not aware of it.  

These riders protect the insured when disabled, providing their policy premiums would be waived by the insuring company while coverage continues to be in effect. Generally there is a six month period of total disability required before a claim can be filed to “waive premiums” (whole life or term policy) or “cost of insurance” (universal life). Additionally, on a whole life policy, cash values continue to increase during the time waiver of premium is provided.

Having either of these riders would mean a slight premium increase, however, considering the value gained, when disabled, and not having to wonder how you might pay premiums – assuming your income is decreased and expenses may be higher due to the disability – it can be a very worthwhile benefit.

An example would be a 30 year old male non-tobacco user on a $250,000 policy. A sample Universal Life policy would have about $6.30 more monthly premium to provide this waiver of charges benefit, while a 20 Year Term policy would have a monthly premium of $2.41 more to provide waiver of premium.

Thinking about the number of clients I’ve had become totally disabled over the years; the extra premium is a small price to pay for the benefit of continued life insurance protection during a difficult time. Should the client return to work, they simply pickup the premiums from that point forward without any loss of benefit because premiums had been waived.

I am available to answer any questions you may have and assist you with securing this most valuable benefit to secure your policy, no matter what happens to you.