Waiver of Premium

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Life insurance is a reliable way by which you can secure the future of your loved ones in your absence. However, due to some unforeseen events, the payment of premium for the life insurance plan can become difficult. This is when the Waiver of Premium Rider comes as a relief. When you opt for this rider along with any life insurance plan, the insurer pays all the future premium if the life assured is unable to pay the premium due to an unfortunate event such as death, total and permanent disability, or critical illness. Such riders are offered by most of the life insurers.

Features of Waiver of Premium Rider

Following are some of the common features of a Waiver of Premium rider - 

  1. Entry Age:  The rider is available to individuals from the age of 18 years. The maximum entry age under the rider is usually restricted to 65 years.
  2. Availability: The rider can be opted only at the time of inception of the base policy.
  3. Coverage: The rider coverage is generally available on the occurrence of 3 events - death, total and permanent disability, and critical illness.
  4. Sum Assured: The rider sum assured is equivalent to all the payable future premiums without any maximum limit, subject to underwriting.
  5. Waiting Period: For critical illness and total and permanent disability claims, the rider usually features a waiting period of 90 days from the date of policy issuance.
  6. Policy Payment Term & Mode: The rider premium paying term and mode is generally the same as the base plan. However, some insurers do offer a minimum rider term of 5 years.
  7. Termination: The rider plan gets terminated on termination/surrender of the base plan.

Benefits of Waiver of Premium Rider

In case of death or total and permanent disability or diagnosis of any of the listed critical illnesses of the life insured, all the future premiums of the base life insurance plan gets waived off till remaining premium paying term of the base policy.

In the event of an untimely demise of the life assured, the benefit is only available if the life assured and the policyholder under the base plan are different individuals.

Accidental Total and Permanent Disability is defined as a disability which lasts for at least 180 days and renders the life assured of being unable to earn a living.

The list of usually covered critical illnesses is as follows - 

  1. Cancer
  2. Blindness
  3. Coma
  4. CABG
  5. Third Degree Burns
  6. Major Organ Transplant including Bone Marrow
  7. Heart Attack / Stroke
  8. Paralysis of both limbs
  9. Aorta Surgery
  10. Kidney Failure
  11. Brain Tumour

How Waiver of Premium Rider Works?

Let’s understand the working of the Waiver of Premium rider with an example - 

Name of the Policyholder Mr. Singhania
Age35 years
Date of Rider PurchaseJanuary 01, 2020
Base Policy Tenure15 years
Base Policy Premium AmountINR 12,000 per annum
Date of Accident Resulting in Permanent DisabilityJanuary 15, 2021

On the intimation of the total and permanent disability of Mr. Singhania, the insurer will pay the annual premium of INR 12,000 from the year 2022 onwards till the end of the policy term on the due dates.

Waiver of Premium Rider Exclusions

Following is the list of common exclusions under this rider - 

  1. Suicide, attempted suicide
  2. Self-inflicted injuries
  3. Venereal diseases (STDs)
  4. War, terrorism, rebellion, military power, civil commotion, etc.
  5. Professional and adventurous sports like bungee jumping, martial arts, parachuting, mountaineering, racing, and underwater activities
  6. Disability as a result of use of alcohol, drugs or narcotics
  7. Nuclear contamination
  8. Participation in naval, military or air force operations
  9. Criminal / Illegal activities

Who Should Buy Waiver of Premium Rider?

Following set of individuals should get a Waiver of Premium rider with their base life insurance plan - 

  1. Sole bread earners of the family
  2. People whose work environment involves exposure to chemicals, pollution, etc
  3. People with family history of medical conditions
  4. People who commute long distances on a regular basis

Waiver of Premium FAQs

  • 1. Do I get any tax benefit available with the Premium of Waiver rider?

    Yes, you can claim a tax deduction of up to INR 1.5 Lakh against the premium paid for the rider under Section 80C of the Income Tax Act. Moreover, the rider benefits are eligible for tax exemption under Section 10(10D) of the Income Tax Act.

  • 2. Does the rider provide any loan facility?

    No, the riders usually do not offer any loan facility.

  • 3. Can I opt for this rider during the rider policy term?

    No, you can attach this rider to the base plan only at the time of inception of the base plan.

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