Ensuring coverage in crisis: Understanding 'waiver of premium' rider

The 'waiver of premium' rider can be purchased at the time of policy inception

Life throws surprises when we least expect them. And not all are pleasant. It is in these trying times that your insurance policy comes handy, offering some cushion from the shock. But did you know that by paying some extra sum of money you can avail a crucial safety net known as ‘waiver of premium’ rider.
 

What is the 'waiver of premium' rider?
 

A ‘waiver of premium’ rider is an add-on feature that can be attached to a life insurance policy. It ensures that if the policyholder becomes disabled or critically ill and is unable to pay the premiums, the insurance company will waive future premium payments while keeping the policy in force. This rider essentially acts as a safety net, allowing the insured to maintain their life insurance coverage during times of financial hardship caused by disability or severe illness.

 

The cost of adding a ‘waiver of premium’ rider varies but typically ranges from 10-15 per cent of the base premium. While this represents an additional expense, many financial advisors believe it is a worthwhile investment, especially for those with long-term financial obligations.
 

‘Waiver of premium’ rider can offer several benefits to policyholders.

 

Financial security during disability: If the policyholder becomes disabled due to illness or accident, this rider ensures the policy remains active without further premium payments.
 

Protection against income loss: In case of job loss or reduced income due to disability, the policyholder doesn't have to worry about policy lapse.
 

Affordability: The cost of this rider is generally low compared to the benefits it provides, making it an affordable addition to the base policy.
 

Tax benefits: Premiums paid for this rider may be eligible for tax deductions under Section 80C of the Income Tax Act, subject to overall limits.
 

Family protection: Ensures that the policyholder’s family remains financially protected even if the primary earner is unable to pay premiums.

 

Stress reduction: Alleviates financial stress during challenging times, allowing the policyholder to focus on recovery.

 

The ‘waiver of premium’ rider enhances the value of policies by offering policyholders financial security and peace of mind. However, it is crucial to thoroughly evaluate available options and select a plan that aligns best with your needs and budget.