When buying an insurance policy you may be faced with the option to include a waiver of premium, the option is most common on life insurance and critical illness policies. Including this option provides a means of insuring your monthly premiums.
What is waiver of premium?
In the event that you are unable to work through illness or injury and suffer loss of income, the waiver of premium rider will cover your monthly payments until either;
- the end of the policy term;
- a specified age;
- or until you are able to return to work.
The payments are made after a set deferment period. Let it be noted that a such a waiver covers you for illness and injury only; it does not cover unemployment/redundancy.
As with all insurance products, the terms and conditions of policies do vary from provider to provider so do read through Key Facts and terms of the cover to truly understand the protection it provides.
Why should I choose waiver of premium?
Waiver of premium protects the payment of your monthly premiums to ensure your cover continues during a period where you might be most at risk, in the period of a sustained illness or injury suffering loss of income.
It is often recommended alongside term assurance or a critical illness policy because if you were unable to continue to make payments for this cover then it would be withdrawn and you would lose the future security the policy provides. It is also likely that if the policy were to cease due to payments not being met you would have to apply for cover being a few years older in turn making the premiums more expensive.
How much does waiver of premium cost?
Adding the waiver to your policy typically adds another 2.5% to 3.5% to the monthly premium. There are other factors that are considered in the costing such as the occupation of the policyholder and given their occupation the likelihood of needing to claim.
Are there any restrictions?
There may be associated restrictions, such as age and physical condition caveats, which could void the waiver of premium clause. It may well be required that the policyholder be above and below a certain age, or that a medical should take place to confirm that the policyholder is healthy beyond the reason for the loss of income.
It is very important to understand which restrictions may come into play, and to be aware of the fact that most people must lose their income for at least six months to be eligible for the waiver of premium to kick in.
Some occupations cannot be covered for waiver of premium, as the insurers regard protecting their income as too risky, take a professional sports person for example.
Next Steps
If you are looking for a specific insurance product, say term assurance or a critical illness policy and want to include the waiver then simply navigate to the relevant quote form and select the waiver of premium options. We deal with insurance every day so whether it is more information,
For more general insurance information visit the insurance section at Directgov
