What is waiver of premium?

Waiver of premium or ‘waiver of premium benefit’ is an additional benefit which can be added to your life insurance cover for an additional cost.

It ensures your life insurance remains intact if you become incapacitated by illness or injury and are unable to pay your monthly premiums.

Without such cover, failing to make premium payments will result in your life insurance being cancelled and your loved ones being unable to make a claim when the day comes.

At Reassured, we offer an FCA regulated, award-winning service to help you find the right life insurance to meet your unique needs.

Get in touch today to discuss your options.

Keep reading to determine if a waiver of premium is right for you…

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How does waiver of premium work?

Waiver of premium must be set up during your life insurance application, it can’t be added at a later date.

If you're incapacitated due to an illness or injury during the term of your cover, you can then make a waiver of premium claim.

Your cover will then remain intact without the need to make monthly payments whilst you remain incapacitated until your policy expires or until you reach a specific age.

The upper age limit covered by waiver of premium benefit will differ depending on the insurer, therefore, it's important to review your policy terms and conditions.

This is usually around retirement age.

If incapacity ceases and you're able to return to work, premium payments will recommence.

The good news is that waiver of premium allows you to make multiple claims.

Therefore, if upon returning to work you become incapacitated again, you can file for waiver of premium again.

If this is a continuation of the previous illness/injury, you may be able to file for a continuation and waiver of premium can commence immediately.

If the incapacitation is as a result of a new illness/injury you may be required to satisfy the waiting period before you can make a new claim.

Is there a waiting period?

Yes, as discussed, before a waiver of premium claim can be filed, you must be incapacitated by an illness or injury for a specified period of time.

This ‘waiting period’ will differ depending on the insurer but is usually 3, 6 or 9 months.

Therefore, you'll be required to continue to make premium payments whilst incapacitated for this period of time before your waiver of premium benefit comes into play.

To determine the waiting period attached to your policy, you should refer to the terms and conditions of your cover or contact your provider.

Waiver of premium claim

In order to make a waiver of premium claim, you'll need to meet specific criteria.

This includes being incapacitated by an illness or injury which requires medical/surgical treatment and having continued to make premium payments for the specified waiting period.

To make a claim, you'll need to contact your life insurance provider and produce evidence of your illness/injury, usually in the form of medical documentation.

Different life insurance providers will have differing definitions of ‘incapacitated’.

Some insurers will accept you being unable to work your specific job, others will require being unable to work a job suited to your specific education and skill set, whilst others will only accept your waiver of premium claim if you're unable to work any job.

For insurers which require you to be unable to work any job, your claim will be accepted if you're unable to perform 3 or more of the following:

  • Walking
  • Climbing the stairs
  • Lifting
  • Bending
  • Getting out of the car
  • Writing

Do I need waiver of premium?

Whether or not you need a waiver of premium will depend on your individual circumstances.

Without such cover in place, if you're incapacitated and unable to afford your monthly life insurance premiums, your cover will expire and your selfless investment wasted.

Therefore, if you don't have a significant amount of savings or income protection, you're likely to benefit from having waiver of premium protection in place.

Income protection is another form of insurance which will pay a percentage of your salary if you're unable to work.

Therefore, this pay out can then be used to cover the cost of your life insurance premium if you're unable to work, reducing the need for a waiver of premium.

Waiver of premium benefits

  • Ensure your life insurance cover is not affected if you're unable to work due to illness or injury
  • Cost is included within your life insurance premium, (although premiums adjusted accordingly)
  • Multiple claims are available
  • Uses life insurance underwriting to ensure a valid claim is more likely
  • Waiting period and type of incapacitation varies between insurers to ensure you get the right cover to meet your needs

Is waiver of premium same as PPI?

No, a waiver of premium and personal protection insurance (PPI) aren't the same thing.

PPI is an individual contract often unknowingly sold with a personal loan, whereas waiver of premium is an additional feature of a life insurance contract as opposed to a contract in its own right.

Protection length also often differs with PPI tending to be active for the first 12 months of the loan only, whilst waiver of premium tends to run the entire course of your life insurance cover.

Finally, PPI provides automatic acceptance but includes a large number of exclusions which only become apparent at point of claim.

Waiver of premium, on the other hand, uses the underwriting process at point of life insurance application to determine any exclusions which need to be in place.

As a result, a successful claim is far more likely, and policyholders are more aware of exactly what is included within their cover.

Waiver of premium declined

As discussed, the waiver of premium benefit is accepted or declined using the underwriting process at the point of life insurance application.

Therefore, any pre-existing medical conditions you have will be on record.

The most likely reasons for having a waiver of premium claim declined are:

  • You don't meet the providers' definition of ‘incapacitated’
  • You have filed the claim too early and therefore, haven’t satisfied the waiting period
  • The reason for incapacitation is defined as an exclusion due to a pre-existing condition you have

It's unlikely you'll be declined a waiver of premium benefit being added to your life insurance policy, although exclusions may be added depending on any pre-existing conditions.

Compare quotes for the deal

As with life insurance, the cost of cover of waiver of premium can vary significantly between providers.

Life insurance premiums are increased to compensate for the additional protection of waiver of premium.

Therefore, to ensure you receive the best deal it's essential to compare multiple quotes.

Unfortunately, at Reassured, we don't currently offer a waiver of premium option, but we can arrange you comprehensive life insurance from just 20p-a-day.

Simply get in touch to secure the best available deal.

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