Waiver of Premium Rider in Term Insurance – A Detailed Guide


5 min read

We all have a responsibility towards our families. When we have a family, we think about taking care of not only their present but also their future. Unfortunately, the rise of new diseases and lowered immunity levels of most people has caused many health complications. That is why; taking care of our health is not the only factor that we should focus on. A further step that we should take, especially for our family, is buying a term insurance policy. As you buy a term insurance plan, you can rest assured that even if something unfortunate happens to you, your family will not have to face financial challenges.

What is term insurance?

A term insurance policy is a type of life insurance policy offered by several insurance companies these days in India. When you have a term insurance policy, you just have to keep paying the premiums regularly. Term life insurance comes with a certain tenure, which can be 20, 30, or 40 years. If you pass away within the tenure, the insurance provider will offer the coverage amount and other benefits to your family. On the other hand, if you survive through tenure, you will not get anything. There is no maturity amount offered to the policyholders or the nominees in term insurance. The only return that you can get is the premiums that you pay throughout the period. This also happens if you choose the Return of Premiums option, which is available on some term insurance plans.

If you want to get the maximum benefits out of your term insurance policy, you can buy a rider along with the plan. For this, you have to pay additional premiums. However, the coverage amount you will get will be much higher. There are various types of term insurance riders offered by the insurance providers; however, the most sought-after among them is the waiver of premium rider.

What is a waiver of premium rider in Term Insurance Policy?

Waiver of premium, as the name suggests, is one of the term insurance riders that waive off all the future premiums that you would pay to the insurance provider. However, it only happens when you as a policyholder become physically disabled, as a result of which you are not in a state to work and have an income. This rider ensures the continuation of the policy even if the policyholder is not able to make payments of the premium.

There are two situations in which a waiver of premium rider works. The first is when the policyholder suffers from a permanent disability that happens because of an accident, for at least 6 months. The second situation is when the policyholder is diagnosed with a critical illness.

What is waiver of premium rider?

One of the main reasons to go for this rider is that it doesn’t deprive the nominees of the policy of the benefits, even when the premiums are not being paid by the policyholder anymore. This helps the family of the policyholder to manage their finances even when the sole earning member of the family is not in a position to work anymore.

This rider can be bought while buying the term insurance policy. However, you need to know about the fact that you can claim under this rider only once. When the base policy terminates, the rider also gets terminated. The benefits under the rider coverage are paid. The policyholder can get tax benefits while having this rider under the Income Tax Act, 1961.

Also Read: What is LIC’s Premium Waiver Benefit Rider

Documents necessary for the Claim Settlement Process

While you are making term insurance claim for the rider, you would need to submit certain documents for a smooth process. Here are some of them mentioned below:

  • Duly filled claim application form
  • ID proofs
  • All the original policy documents
  • Policyholder’s residential address
  • A medical statement provided by a doctor confirming the health condition
  • Certificate of disability, that you need to get from a government hospital
  • Copy of bank passbook

Exclusions under the waiver of premium rider

The waivers of premium rider exclusions are mentioned herein below:

  • Congenital Infection
  • Self-inflected injuries
  • Substance abuse
  • Radioactive contamination due to nuclear accident
  • Pre-existing illness
  • Breach of the law, war, civil commotion, or willful participation in violent acts

Points to remember about waiver of premium rider

Here are some of the important points that you need to know about waiver of premium rider:

  • The minimum entry age for this rider is 18 years and the maximum is 65 years
  • The maximum maturity age is 70 years
  • The minimum sum assured is the same as the sum assured amount of the base policy, while there is no maximum limit
  • The coverage time period is the same as the term of the life insurance policy
  • There is a waiting period of 90 days for this rider
  • The premium payment term is precise as the life insurance policy
  • The premium payment mode is the same as the base policy

Benefits of waiver of premium rider

As the waiver of premium benefits are concerned, here are a few of them mentioned below:

  • Continuance of the policy: Having a waiver of premium rider ensures the continuation of the policy even when the premiums are not paid anymore by the policyholder. All the future premiums are waived off and the benefits are offered to the family of the policyholder.
  • Premiums are affordable: If you buy the rider while buying the policy, your premium amount will be lesser and coverage will be higher.
  • No need to buy an additional policy: When you have a waiver of the premium rider, you do not need to buy an additional policy. The coverage offered to you by the base policy along with this rider will be enough.
  • Tax benefits: The premiums paid under the base policy and the waiver of premium rider are eligible for tax exemptions under Section 80C of the Income Tax Act, 1961 up to INR 1.5 lakh.

If you are looking for the best term insurance plan with riders, you can visit a website where you will not come across one or two such policies and riders but many. This will also enable you to make a comparison between as many of them as possible and accordingly choose one.

Also Read: Standalone Policy vs. Critical Illness Rider

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What is a Waiver of Premium Rider in Term Insurance?

A Waiver of Premium Rider is an optional add-on to a term life insurance policy that provides a safety net in case the policyholder becomes disabled or seriously ill and is unable to work and pay the premiums. The rider allows the policyholder to continue their life insurance coverage without paying premiums during the period of disability or illness.

How does the Waiver of Premium Rider work?

If the policyholder becomes disabled or seriously ill, and unable to work and pay the premiums, the Waiver of Premium Rider waives the requirement for the policyholder to pay the premiums for the duration of the disability or illness. This means that the policy remains in force, and the death benefit will be paid out to the policyholder's beneficiaries in case of death during the term of the policy.

What are the benefits of having a Waiver of Premium Rider?

The Waiver of Premium Rider provides peace of mind for the policyholder and their family in case of unexpected disability or illness. It ensures that the policyholder's life insurance coverage remains in force, and the death benefit will be paid out to the beneficiaries in case of the policyholder's death. It also helps to avoid any lapse in coverage that could result in loss of the policyholder's investment in the policy.

Is the Waiver of Premium Rider expensive?

The cost of the Waiver of Premium Rider varies depending on the insurance provider and the specific policy. However, it's generally not too expensive, and the cost can be offset by the security and peace of mind it provides. The cost of the rider is typically a percentage of the base policy premium.

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Aug 23, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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