How does the Waiver of Premium Rider work in Term Insurance?
When you buy a term insurance policy to protect your family from the financial risk of your death, you also have the option to include some additional benefits that cover some specific circumstances. While the base Sum Assured of the term insurance plan provides a death benefit to your family, these add-ons - also known as Riders provide an extra cushion in certain specific situations.
Some of the most common Riders you’ll see in the market are as follows.
- Critical Illness Rider: It offers you a sum of money in case you’re diagnosed with a serious disease that is listed in the policy.
- Accidental disability Rider: It pays you a sum of money in case you get permanently or temporarily disabled (categorically listed in the policy) due to an accident
- Accidental Death benefit: It pays your family an additional sum of money, should your death happen because of an accident.
Besides these, there are several other Riders as well - and one of our favorite ones to speak about is the Waiver of Premium Rider. In fact, we listed the Waiver of Premium Rider as one of the Top 3 Features to Pick while customizing a term insurance plan.
But what is waiver of premium in term insurance? HOw does it work? And why do we love it so much?
Let's find out!
What is the Waiver of Premium Rider, and how does it work?
When you add this Rider to your term insurance plan, you get a very special benefit. If certain circumstances defined in the Rider occur, you will not need to pay any more premiums throughout the rest of the term. Yes! You get a free cover (the whole Sum Assured that you signed up for) - without having to pay any more premiums.
There are two types of circumstances for which a Waiver of Premium Rider is offered.
- Waiver of Premium in Accidental Disability: This Rider kicks in if you are permanently disabled due to an accident. Once you let your insurer know of this incident - your future premiums will be ‘waived off’ - meaning you do not have to pay any more premiums until the end of the term. However, you will retain the full cover. So, in case your death occurs during the remaining plan duration, your family will receive the full death benefit amount.
- Waiver of Premium in Critical Illness: Similarly, this Rider kicks in if you’re diagnosed with any of the serious diseases listed in the policy document. Once you inform the insurer about this diagnosis, you no longer have to pay any future premiums through the end of the term. But, you will retain the full-term insurance cover that you signed up for. In case your death happens during the rest of the policy term, your family will be entitled to the full sum assured amount as a death benefit.
Why is the Waiver of Premium Rider a must-buy?
In our opinion, every term insurance plan must have the waiver of premium benefit added to it. It is a no-brainer and there are two reasons for this.
One, the Waiver of Premium Rider is a very low-cost rider. Usually, it can be added for INR 400-500/year for a 1 Crore cover making it one of the cheapest riders available in the market.
And two - It is very helpful in a time of need. When you get diagnosed with a serious disease or suffer an accidental disability your family will go through a severe financial disruption. There is likely a loss of income, and your expenses are very likely to rise. Even with health insurance, you will face costs that you will have to pay for out of your pocket including long-term care (nurses, doctor visits, physiotherapy, etc.) as well as changes to the house to accommodate your needs (building a ramp, investing in a mechanized bed, wheelchairs, etc.)
With the Waiver of Premium Rider, you won’t have to worry about paying the premiums too.
What’s the Beshak Recommendation for the Waiver of Premium Term Insurance Rider?
We think the Waiver of Premium Rider is a no-brainer, and you must always choose it. It is a very small cost to pay for a huge benefit that can help your family in times when there will be a financial crunch - in serious disease and in disability.
We strongly recommend that every person buying a term insurance plan takes this add-on as well.
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- When you’re customizing a term insurance policy to fit your family’s needs, you’ll often hear about riders. They are add-ons that provide additional benefits, under specific circumstances.
- Critical illness riders, Accidental disability riders, and accidental death benefit riders are some of the most common riders sold in the market.
- There’s one more rider that is very important to buy and a no-brainer - Waiver of premium rider. It will waive all your future premiums under specific situations. Meaning, you won’t have to pay any future premiums, but can still enjoy the cover for the rest of the term.
- This rider is offered for two types of circumstances - waiver of premium in accidental disability and waiver of premium in critical illness.
- Waiver of premium in critical illness rider will waive off all your premiums if you get diagnosed with an illness listed in the policy.
- Waiver of premium in accidental disability rider will waive off all your premiums if you get permanently disabled due to an accident, during the policy duration.
- This rider is very cheap and extremely helpful in the time of need. Hence, we recommend that you should always consider buying it with your term insurance policy.
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