Understanding the Disability Waiver of Premium

Aaron Club Throw01
The Disability Waiver of Premium rider
takes financial stress away,
so you can still play sports
like you use to.

Disability Waiver of Premium is a rider available on most life insurance policies.However, most insurance companies have a maximum issue age on the rider of 60, so applicants over that age will not be able to add this rider.

The Disability Waiver of Premium is intended to waive the insured’s premiums should he or she become disabled. Essentially, the insurance company will forgo future premiums while the insured retains the policy benefits. Remember though, there is usually a waiting period of 90 days.

The disability waiver feature differs from company to company, but often expires at age 65. The one major caveat is that most insurance companies change the definition of disability to “Any Occupation” after two years. Under this definition, total disability means not being able to work in any occupation. Therefore, if the insured is a computer consultant and their disability prevents them from working at their primary occupation, but they can still work as a checkout clerk at a grocery store, they won’t receive a cent. Still confused? You can find a more comprehensive explanation of disability definitions here.

The Disability Waiver of Premium is intended to waive the insured’s premiums should he or she become disabled. Essentially, the insurance company will forgo future premiums while the insured retains the policy benefits.

Given the limitations of the Disability Waiver of Premium rider, the applicant is far better off looking at his or her disability insurance through a more holistic lens i.e. the insured should have an adequate amount of disability insurance to protect the needed percentage of his or her total income. It’s usually recommended that the insured cover anywhere from 50%-66% of their total income. That income, which is tax free (assuming the premiums are paid with after-tax dollars) can then be used to pay for food, household and other related expenses, including the insured’s insurance policy.

The one exception to this rule is applicants with high-risk occupations. On traditional disability policies, landscapers have a higher-risk occupation than physicians and pay a much higher premium. But, with the Disability Waiver of Premium, the risk charge is the same for both occupations. In this instance, it makes sense if traditional disability insurance is unaffordable because something is better than nothing.

You can get a free disability insurance quote at our Disability Instant Quote Page, or contact us at 1.866.899.4849 for more information. 

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  • S. A.
    September 3, 2016 at 12:42 pm

    My wife has life policy with a waiver of premium upon total disability. She suffers from 4th stage lung cancer and cannot work. would there be a waiver:

    a. If one cannot work but has other income e.g. pension, interest, rent or has asset.
    b. IF One is retired and is living on retirement income.



    • LSM Insurance
      September 3, 2016 at 1:02 pm

      I’m sorry to hear about things. Whether you wife qualifies depends on her age – there are age restrictions on the disability waiver depending on the policy as well as definition of disability within the waiver. You should check with the insurance company and get something in writing.

  • Grace
    October 7, 2014 at 4:08 pm

    Got a copy of insurance policy lost in hurricane agent knew spouse was totally disabled got a new agent ask for a replacement and notice waiver for disability sent in numerous papers of date he became disabled got run around continued to pay policy they sent a check for an amount was not even a years premium is there anything to do or just count it is a loss

    • LSM Insurance
      October 7, 2014 at 4:12 pm

      If you think the agent purposely deceived you could try contacting the insurance companies customer relations department and see if they will do anything. If not you could contact a lawyer. I hope things work out.

  • Peg
    July 10, 2013 at 1:39 pm

    Hi…I have been reading everything I can about a Disability Waiver of Premium, but I still cannot get an answer to this…I have a policy that ends in 20124. IF my policy says “Waiver expires in 2014” (when I am 60), does that mean that, after 2014, the waiver cannot ever be elected should I become disabled…OR…does it mean that IF I am already using the waiver of premium due to a disability, it completely ENDS in 2014 and I would then have to pay the premiums until 2024 (age 70), when my policy ends?. Seems unfair if it’s the latter.

    • LSM Insurance
      July 10, 2013 at 2:49 pm

      Thanks for the note Peg. It depend on the policy wording. It would write the insurance company and ask for a response in writing. I hope things work out.