Life insurance can be a helpful way to protect those you care about most. But sometimes, the standard policy doesn't fully cover everything or take into account certain circumstances. That's why many life insurance policies can be customized with insurance riders to cover additional needs.
In simple terms, a life insurance rider is an optional set of terms that you can choose to add to your policy. Think of them as special add-ons, similar to extra features you can purchase for a car. If a standard car doesn't come with heated seats, you can pay a little extra for this feature. Life insurance riders work much the same way, allowing you to pay a little more to have these additions included in your policy.
What Are The Types Of Life Insurance Riders?
Different life insurance companies will offer different options, but some common riders include term conversion (for term life insurance you want to convert to whole life insurance), long-term care (to cover medical costs of extended care, such as for chronic illnesses), critical illness riders (to cover medical costs for critical illnesses), child or spousal riders (to add family members to your policy), or the waiver of premium rider which we’re covering here.
What Is A Waiver of Premium Rider?
A waiver of premium rider is a special set of terms added to your life insurance policy which absolves you of the need to pay your premiums under certain conditions. This allows you to waive the payments you would otherwise have to make regularly, hence the name. Waiver of premium riders generally only apply under circumstances which would prevent you from making your regular payments. Unemployment or disability are two examples.
How Does A Waiver of Premium Rider Work?
This rider, if added to your life insurance policy as a supplemental benefit, will offer you waiver-of-premium coverage for an additional fee. So, if you become unable to work and meet the qualifying circumstances (we’ll go over these next), your life insurance coverage will continue without you having to pay your premium. As an added benefit, these payments become permanently waived even if you are able to work again in the future.
What Are Qualifying Circumstances?
People with pre-existing disabilities preventing them from working cannot receive a waiver of premium rider. People over age 65 also do not qualify for a waiver of premium rider. Every policy will have its own specific rules for what counts as qualifying circumstances, so be sure to talk to your insurance agent about the details. Also, keep in mind that all waiver of premium riders have a waiting period.
What Is The Waiting Period?
This rider does not activate immediately upon stoppage of work but requires a waiting period before going into effect. Usually, this is 6 months, although individual life insurance policies may vary. This is another point to confirm with an insurance agent.
Waiver of premium riders may seem complex, but they can be an important addition to your insurance policy to keep yourself covered in a worst-case scenario. Knowing all your options is important when purchasing life insurance. At Ethos, we're here to guide you through riders and other term life insurance choices, so you can be ready for whatever life throws at you.