Look, the world of disability insurance can be confusing. With all these disability terms, it's hard to keep anything straight. But a disability waiver of premium is one of the most important ones to know. It could save your insurance policy from lapsing due to non-payment.
Don't worry, though. An independent insurance agent is a total expert in the world of disability insurance and is very well-versed in waiver of premiums and all that goes with it. Find out more about this important piece of the disability pie and you'll have a nice jump-start before you talk to your agent.
What Is a Disability Waiver of Premium?
A disability waiver of premium is pretty much how it sounds. The insurance company is waiving your premium due to a disability. It's a provision in an insurance policy that basically says the insurance company won't make you pay the premium if you become disabled or seriously injured.
There are normally two types of policies that have a disability waiver of premium and they are as follows:
- A life insurance policy: This policy provides coverage in the form of a monetary amount to be paid to your beneficiary at the time of your death.
- A disability policy: This policy provides coverage in the form of supplemental income to be paid to the claimant if they become disabled or ill and unable to work.
How a Disability Waiver of Premium Works
Insurance companies normally retroactively apply the waiver of premium to the start of the disability. This is especially nice if you’ve already paid in some premium while the waiver should have been in effect. The insurance company will refund any overpaid premiums.
This allows you to continue reaping the benefits of the insurance policy without being responsible for the premium if you sustain a covered injury that keeps you from affording coverage.
The waiver of premium typically applies to two types of insurance policies, the two being disability insurance policies and life insurance policies. The waiver of premium is also not usually built into the policy and is a separate coverage added known as the waiver of premium rider.
Now, there are stipulations to how the waiver of premium works, but keep in mind that each insurance company is different and has their own set of underwriting guidelines on the matter.
Some insurance companies have specific definitions on what type of injury will allow the waiver of premium rider to kick in. Not all injuries are eligible and the fine print should be read with your independent insurance agent.
Insurance companies may even work the waiver of premium cost into your current pricing just in case it's used. This allows the insurance companies to make up any money they may lose.
How to add the waiver of premium to your disability insurance policy should be discussed with your local independent insurance agent, because setting up your disability policy correctly from the get-go is the best way to ensure proper coverage.
What Is a Disability Waiver of Premium Benefit Rider?
A waiver of premium benefit rider is a clause in the insurance policy saying that you, as the insured, will not be charged a fee for maintaining the policy. It’s safe to say no one likes fees, so it’s a good idea to have this benefit rider on your policy.
Many have chosen to have this rider attached to their policy so that when a disability occurs, the policy continues to function including the death benefit, dividends, and cash values.
- Death benefit: The amount that is paid to the person listed as the beneficiary on the policy of the person who has passed.
- Dividend: A sum of money paid to its shareholders on a regular basis out of the company’s profits.
- Cash values: The amount paid to the policy owner by the insurance company when the policy is canceled.
Disability Waiver of Premium In a Life Insurance Policy
You know the basics on disability waiver of premiums but what about how it applies to a life insurance policy? It’s pretty much the same except it waives the premium for your life insurance policy specifically if you become injured or disabled.
Just like a waiver of premium concerning your disability insurance policy, it too could have restrictions on what type of injury is covered under your waiver of premium for your life insurance.
Remember that each insurance company is different, and how they apply their waiver of premium benefit is unique to them. Some insurance companies will also charge you for the waiver of premium rider in your regular monthly, quarterly, semi-annual, or annual life insurance payments.
This is where nothing is truly ever free comes into play. Not to worry, your local independent insurance agent has all of the answers when it comes to the waiver or premium rider. Contacting your agent is your next step in understanding your waiver of premium and how it applies to your disability or life insurance policies.
Total Permanent Disability Benefits vs. Disability Waiver of Premium
Total permanent disability benefits kick in after a disability has become permanent and you are no longer able to continue in your career like before. Think if Babe Ruth’s hands got permanently injured. Likely the nickname "The Great Bambino" wouldn’t have been coined, and he would have been unable to continue his work as a professional athlete.
- The disability waiver of premium waves your premium for a certain amount of time until you are able to go back to work.
- The total permanent disability benefit can be applied for after a medical doctor has deemed you permanently disabled and unable to continue your career as you know it.
A disability waiver of premiums can be a really helpful thing. If you become disabled, the last thing you want to worry about is how you are going to pay for your disability or life insurance premium.
If you have a job that requires you to have a special set of skills, then make sure you have total permanent disability benefits. It would not be cool if you were, say, a dentist and could no longer use your hands due to a disability. Pretty sure you need those if you are going to be poking around in people’s mouths.
Last, make sure you speak with your independent insurance agent. They really can save you time and money when it comes to your insurance policies.
What's So Great about Independent Insurance Agents?
Tired of researching about disability insurance and benefits? That’s why independent insurance agents were invented — to help you navigate the often-confusing world of insurance. They know everything there is to make sense of all the crazy insurance jargon.
An independent insurance agent is a licensed pro who knows how to find exactly what you want for the best possible price. They find you the best carriers with the best coverage and pricing to fit your budget.
So go on, give your local independent insurance agent a call. They're all geared up to help, and they know a thing or two about what you need.