Waiver of Premium Rider in Life Insurance

Life Insurance is something that every individual should consider buying. It offers financial independence to families after a policyholder's death and empowers them to fulfil their dreams and goals at different stages of life. You can set your priorities and identify your needs for a suitable life insurance plan. Moreover, additional coverage, such as Waiver of Premium Rider, waives off all the remaining premiums if the policyholder becomes physically disabled. Here are essential details about the Waiver of Premium Rider (WOP).

What is Waiver of Premium Rider in Life Insurance?

You can opt for a Waiver of Premium Rider when buying a life insurance policy. It waives off future premium payments if you fall critically ill, seriously injured or physically disabled. It ensures your insurance advantages still continue when you cannot pay the premiums. 

Specific terms and conditions may apply, such as meeting certain age and health requirements to avail Waiver of Premium Rider. However, it is an excellent option to add to your life insurance if you are concerned about getting diagnosed with an illness or want to strengthen the coverage for your family. There are many other riders' life insurance offers. Learn about types of life insurance riders in India.

Why is the Waiver of Premium Rider important?

Here are some key reasons why getting a Waiver of Premium Rider is Important.

• It is a potent supplement to your life insurance policy which can support you and your family during unforeseen financial crises.

• It can help when you cannot work or continue paying the premiums, as all premiums will be waived if you lose your income source.

• It protects your coverage from even if you cannot pay premiums due to illness or being physically impaired.  

• It allows your loved ones to receive death benefits if you pass away due to your illness.

• It can be cheaper than paying out-of-pocket expenses during critical injury and illness.

How does the Waiver of Premium Rider work?

When you purchase a life insurance policy with a Waiver of Premium Rider, you must pay an additional premium to avail of the rider's benefits. It is important to note that most insurance companies will not allow you to add the rider later to the policy, so you must purchase it when you buy it.

If you become critically ill or disabled, you will be eligible for a waiver on the remaining premiums until your condition resolves. Suppose your condition improves, you recover from the disability or illness, and then again fall critically ill or become disabled. In that case, you can benefit from the Waiver of Premium Rider again. Moreover, all future payable premiums will be waived if the policyholder passes away or suffers an accidental total or permanent disability. This way, you can claim the waiver multiple times during your life insurance tenure.

It is worth noting that adding the Waiver of Premium Rider to your policy can increase the price of your life insurance policy. Additionally, as mentioned in the policy, the rider only takes effect after passing a waiting period, which can range from six months to one year. If you get physically disabled during the waiting period, you may receive a full refund on the paid premiums.

It is important to note that the WOP rider only takes care of your premiums if you meet the specific definition of disabled or critically ill mentioned in your policy. So, always understand the policy thoroughly before opting for the rider.

Benefits of adding Waiver of Premium Rider to Life Insurance

Buying the Waiver of Premium Rider to your life insurance plan has various benefits. Here are a few examples.

Offers financial security

Life insurance is a great way to get financial security for your loved ones. Adding a WOP rider ensures your policy continues if you get seriously ill or injured and are unable to work.

Provides protection against uncertainties

While life insurance offers protection to your family after your demise, getting a WOP rider will also protect you from the uncertainties of life. In case of accidents, permanent disability or critical illness diagnoses, all future payable premiums get waived.

Prevents policy lapse

The life insurance policy usually lapses if you cannot make payments due to an illness. However, adding the Waiver of Premium Rider will prevent your policy from lapsing.

Supports recurring illness or disability

One of the best things about a WOP rider is that it is not limited to one-time usage. If you fall critically ill or get injured after complete recovery from one event, you can use the WOP benefit again if you meet the requirements.

Provides tax benefits

Adding a WOP rider to your life insurance plan can help you avail of tax benefits under Section 80C of the Income Tax Act, 1961. The premium you pay towards the rider is also eligible for tax exemption under the old tax regime.

Eligibility for buying Waiver of Premium Rider

The eligibility criteria for getting a Waiver of Premium Rider include the following.

• The minimum age limit to opt for a WOP rider is 18, and the maximum is 65.

• The insurance company may not consider any pre-existing illness or disability. 

• The insurer might consider your overall health, occupation and lifestyle.

• The waiting period for WOP to come into force will be 6 to 12 months depending upon the terms of the insurer.

Exclusions under the Waiver of Premium Rider

Exclusions in a WOP rider may vary from one insurance agency to another. However, here are some standard exclusions.

• Suicide 

• Self-harmed injuries

• HIV/AIDS

• Alcohol or substance abuse

• Congenital infection/diseases

• Injury due to adventure sports

• Injury due to hazardous profession

• Pre-existing disability or medical condition

• A nuclear accident caused by radioactive contamination

• War, breach of law, civil unrest or involvement in violent acts.

How to buy the WOP Rider

You can opt for a Waiver of Premium Rider in the following two ways.

Opting for a built-In Life Insurance feature

Some life insurance plans come preloaded with the feature of Waiver of Premium. It's a great way to get additional financial coverage for you and your family. In this case, you do not have to pay extra to get this rider.

By adding the WOP add-on to your plan

You will have to pay a one-time fee based on the terms of the policy and opt for the WOP add-on. Buying this rider will ensure you get the life insurance benefits without affecting the plan's validity.

Who should buy the Waiver of Premium Rider?

The following people can consider buying the Waiver of Premium Rider with their life insurance policy.

• Self-employed people with one source of income

A disability or critical illness may prevent you from working and might stop your income source. Suppose you are self-employed with just one income source. In that case, it is wise to consider getting a WOP rider to reduce the financial burden on your family in case of your disability or critical illness.

• Sole earning member of the family

If you have a fixed source income or are the only earning member in the family, getting a WOP rider for your life insurance can be an excellent option. Your family will continue to get support from your life insurance plan if you are physically impaired or cannot work due to illness.

• Individuals with high-risk jobs and hobbies

Some professions come with inherent risks. For example, working as firefighters, pilots, police officers, drivers, nurses, etc., can be risky. People with such jobs should consider adding a WOP rider to their insurance policy. Also, if you have hobbies that involve high risk, buying this rider can provide financial support in case of an accident.

• Individuals with a family history of illness

If you have any existing health issues or risk falling sick based on your family health history, consider getting the WOP rider. It offers peace of mind knowing you and your family will be cared for if you end up with a similar illness or are disabled.

Real-life example of using WOP Rider in Life Insurance

Let's take a look at a real-life example to understand how Waiver of Premium Rider in Life Insurance works.

Mr. Raghunandan purchases a life insurance policy with a sum assured of Rs. 1 crore. The policy period is 25 years. Without the Waiver of Premium Rider, if Mr Raghunandan passes away, his family will receive the sum assured to help them financially in his absence. 

However, suppose Mr Raghunandan becomes critically ill or physically disabled and cannot pay the premium for specific months. In that case, the policy will lapse, and no benefits will be provided to the family or Mr Raghunandan himself. 

Let's assume Mr Raghunandan adds a Waiver of Premium Rider to his life insurance policy. This step will keep the policy active even if he cannot pay the premiums due to his disability.  The premiums get waived in case becomes critically ill or disabled. He is assured that his family gets the coverage even when he cannot pay the premium.

Frequently Asked Questions 

Below are some of the frequently asked questions on Waiver of Premium Rider in Life Insurance

Is getting a Waiver of Premium Rider worth it?

Getting a Waiver of Premium Rider ensures financial security to the policyholder and their family if they become critically ill or physically impaired. The future premiums get waived off until the policyholder recovers and protects the policy from getting lapsed. 

What is the waiting period for a WOP rider in Life Insurance?

The waiting period may vary based on the insurance agency's terms. However, it can be anywhere from six months to a year. The premium provision takes effect once the waiting period is over and lasts until the policyholder recovers from any critical illness or disability.

What happens if I cancel my Life Insurance policy with a Waiver of Premium Rider?

If you cancel your Life Insurance policy with a Waiver of Premium Rider, you will no longer be covered by the rider, and you will be responsible for paying your premium payments.

How do I know if the Waiver of Premium Rider is right for me? 

It's important to consider your circumstances and risk tolerance carefully when deciding whether to add this rider to your Life Insurance policy. Talking with a financial advisor or insurance professional can also help you make an informed decision.

How does the Waiver of Premium Rider affect my Life Insurance coverage?

This rider does not affect the death benefit or coverage amount of your Life Insurance policy. It only waives your premium payments in the event of a disability.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.

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