Should you add the Waiver of Premium option on a Life Insurance Policy?
When reviewing files of new clients, I notice that many of their existing life insurance polices in many cases do not have a waiver of premium option as a rider in place. Most insurance companies can provide this benefit on life insurance policies for a minimal amount and should really be considered when applying for life insurance coverage.
What is the waiver of premium benefit?
The benefit waives the policyholder's obligation to pay any further premiums should he or she become disabled, but not all companies are the same. For example when considering the company to place your business with you may want to consider unique advantages for some companies, one company that comes to mind extends the waiver of premium benefit to deposits made to the tax-exempt investment account, which is part of the policy.
Issue ages for this benefit with most insurers range between the age of 16 and 55 and the waiting period is usually about 90 days. As of today’s date, one company offers this coverage on a $500,000 term 10 life insurance policy for only $1.05 in extra premiums per month. The coverage is really inexpensive.
There are limitations to the waiver of premium benefit as it is only coverage for the premiums that you pay on the policy. You may want to also consider an individual disability insurance policy for more comprehensive coverage.
About the Author
Neil Lecky is a Life Insurance Advisor, Group Employee Benefit Specialist and an Investment Funds Advisor with Alliance Financial Group. He is also a Branch Manager and Investment Funds Advisor with Investia Financial Services Inc., a mutual fund dealer.