Define: "Waiver of Premium Rider"
An optional policy rider that provides for the continuation of life insurance coverage without further premium payments if the insured becomes totally disabled.
Your insurance company is offering you a rider to protect you against sudden loss of income. Known as the Waiver of Premium rider, this clause comes into effect if you become disabled and can no longer work. The insurance company will waive your future premiums, though usually only after a waiting period (sometimes up to 90 days). You will not pay any more premiums on your insurance policy until you are able to work again. Considering how cheap the rider itself is, this sounds like a great idea!
Or does it? To determine that, you must consider the full financial impact of both the rider and the situation against which it is meant to safeguard you.
So, suppose you have become disabled, and no longer able to bring in an income. It's true, your insurance premiums aren't a concern anymore, but what about your rent or mortgage? Your car payments? Your medical bills, if professional care is required? None of these expenses are addressed by the Waiver of Premium rider. The added protection you have purchased may prove useful to your family after your death, but the protection the rider offers you while you are alive is far from sufficient.
To protect yourself financial stresses caused by a disability you should consider purchasing a separate disability insurance policy. Designed to replace your income should you be unable to continue working, a good disability insurance policy will allow you to continue meeting your financial obligations, premium payments included. But if you're paying for a full disability insurance policy, do you still need the waiver of premium?
More Examples of Waiver of Premium Rider:
Riders are special additions to the policy provisions that offer benefits not found in the original contract, or that make adjustments to it. These special provisions are, in effect, attached to the policy. Riders are not necessarily found in all policies. Because all riders provide some kind of benefit to the policyowner, an extra premium may be charged for them.
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