Waiver of Premium Rider for Term Life Insurance

Term life insurance, in itself, is an essential risk management tool. It offers an affordable way to ensure your family’s financial well-being, even after your demise. However, you must be consistent with premium payments to avail of its benefits. 

Failing to pay premiums for a certain period can result in a policy lapse. This means you will not be able to claim any death benefits if something were to happen to you during the lapsed period. But what if there is a situation where you cannot pay your premiums due to some unforeseen illness or disability? 

Enter Waiver-of-premium rider– your saviour during such financial crunches. Read on to learn more about this crucial add-on and how it helps keep your term life insurance active in times of need.  

What Is a Waiver-of-Premium Rider ?

The waiver of premium riders is an additional feature that can be implemented alongside your standard term life insurance. This rider is designed to waive off premium payments for a specific period in case the policyholder cannot afford those costs. 

With the help of a waiver of premium add-on, you can mitigate the risk of policy lapse and are freed from the burden of premium payments. However, this feature cannot be opted for randomly. Specific conditions have to be met before you can utilise this add-on. 

To better understand how it works, let us consider Lokesh’s case. 

Lokesh, a teacher by profession, has ensured that none of his premium payments are ever missed. However, one day, on his way back home, he met with a terrible accident.

Although he was saved from death, his recovery was supposed to take almost 7 months. With limited resources, Lokesh’s family had to cut down many costs to manage their daily expenses. Thankfully, Lokesh had added the waiver of the premium rider to his insurance policy. With this, Lokesh’s family could halt premium payments until Lokesh recovered completely. 

Benefits of A Waiver of Premium Rider

A waiver of premium rider comes with the following benefits:

1. Financial security

Your income source can be lost due to numerous reasons like a critical illness or permanent disability. In such cases, a waiver of premium rider can provide financial security to your family by reducing the burden of premium payments. However, not all insurers offer a waiver on both permanent disability and critical illness.

2. Protection from policy lapse

When there is a lack or absence of income, paying life insurance premiums becomes difficult. However, missing out on premium payments for an extended period can lead to a policy lapse. But thanks to the premium waive-off rider, you can halt these payments and enjoy life insurance coverage until the income resumes. 

3. No usage limits

One of the best parts of the Waiver-of-premium rider is its unlimited usage. Unlike specific other riders, there is no cap on the number of times you can assume the benefits of this add-on. However, you cannot reap its benefits randomly. To utilise this feature, your situation must fall under the conditions mentioned in the rider’s terms.

4. Tax benefits

Even when not used, the Waiver-of-premium add-on still provides some benefits. The amount used to pay for this add-on’s premiums can be used for tax deductions. Section 80C of the Income Tax Act allows you to avail of a tax deduction of up to ₹1.5 lakhs on your taxable income.

Exclusions

As mentioned earlier, the Premium waive-off rider cannot be used in all scenarios of income shortage. Here are some situations not covered under this rider: 

• Adventure sports 
• Criminal activity 
• Alcohol or drug abuse 
• Pre-existing medical condition 
• Nuclear attack/contamination 
• Congenital disease 

Key Takeaways

Misfortune does not announce itself before appearing in your life. If any such misfortune befalls, and you lose your income source, it is better to stay secured with the waiver of premium rider. With this, you can avoid premium payments in difficult times while the term plan remains active. Additionally, you can consider platforms like PhonePe for a seamless and hassle-free insurance purchase experience.