So
you're going along through life and as a
responsible person, you have your
term
life insurance policy safely in place to
protect your family. As a result
of an injury or serious illness, you
then become total disabled. The
good news is that you survived...the bad
news is that you are disable and most if
not all income has stopped. There
is disability insurance but it tends to
be very expensive. The Waiver of
Premium rider may be just the right
approach to addressing this issue.
Let's look a little deeper at this rider
and how it works.
Total
disability is a nightmare as anyone will
tell you who's witnessed or been through
it. You take so much for granted
in your every day routine that suddenly
becomes critical when total disability
hits. To some extent, it may be
almost as devastating as death to the
family...especially in terms of
financial matters which is where life
insurance comes into play. As the
financial hurricane hits the family, you
may not be able to
afford your term life
insurance monthly premium. This is where
the Waiver of Premium rider comes into
play.
Each
life insurance company and policy is
structured differently but essentially,
the rider will waive the requirement to
pay premium if the insured becomes
totally disabled. There's usually
a waiting period before this waiver will
take place. For example, if the
waiting period is 6 months, the waiver
will not kick in until 6 months after
the status of totally disabled is
established. This means you would
still need to pay the premium for the
first 6 months of disability status.
If you the insured continues to be
totally disabled after the 6 month
window, the premium will not be required
for as long as the insured continues to
be disabled. Some
life insurance
carriers will even return the first 6
months of premium.
One
interesting aspect is the definition of
"total disabled". You want to
double check with your carrier and plan
of choice. It usually touches on
the ability of a person to perform the
duties of their job as a result of
injury of illness. Sometimes there
is a period (say of 18-24) months during
which this applies. There may be a
separate definition after the initial
period (say after 24 months) where the
definition is expanded. This means
it's slightly harder to still qualify as
disable although, if you're really
totally disabled, you shouldn't have a
problem with either definition.
This tightening of the definition
usually changes the requirement from
"your job" to "any job" suited to your
education, training, or experience.
For example, as a surgeon who can no
longer use his/her hands with the
required dexterity, you still be able to
do research or manage doctor groups ect.
As
you read in our
term life insurance
rider section, we're not always the
biggest fan of riders. It really
comes down to cost. If you start
to add multiple riders even at a lower
cost, you could be "nickled and dimed" when
the final bill comes. Each rider
may seem inexpensive but you have to
look at the underlying risk and
probability that they address.
Waiver of Premium riders are usually so
inexpensive that we feel comfortable
with the additional cost versus the risk
they address. Again, it makes
sense to double check the cost when you
find the right plan, rate, and carrier
for you as they will all offer different
rider options at different costs.
We're happy to go through your
particular situation once you have
chosen the "core" life insurance benefit
that fits.
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