Will I Be Covered By My Life Insurance If I Become Disabled?
I you have a life insurance policy and become disabled you will still be covered by your life insurance.
There are even “policy riders” you can add to your life insurance plan that will help pay your premiums if you become disabled after purchasing your coverage.
Many life insurance policies offer a variety of optional coverage benefits called "riders" that may be available to policyholders for an additional premium charge.
Some Common Life Insurance "Policy Riders" Include:
Disability Rider – This covers paying your life insurance premiums while you are disabled and may supplement your income.
Accidental Death Benefit Rider – This rider allows you to receive a portion of your life insurance policy’s death benefit if you become terminally ill with a short life expectancy, such as 6 months to a year.
Critical Illness Rider – this pays you a lump sum if you are diagnosed with one of the critical illnesses specified in your life insurance policy. These illnesses may include cancer, stroke, heart attack and kidney failure, among others. A critical illness rider provides money for you to use for any purpose during your course of treatment.
Each life insurance company has their own selection of riders available to policyholders so be sure to ask what additional coverage may be available to you through the addition of a life insurance policy rider.
Learn more about life insurance policy riders.
Waiver of Premium Life Insurance Disability Rider
By adding the waiver of premium rider to your life insurance policy you can provide yourself with a safety net to make sure your life insurance premiums are paid, even if you become disabled and are not earning an income.
What would happen to your life insurance coverage if you were to become ill or injured and are unable to pay your life insurance premiums?
Your life insurance policy may lapse, leaving you uninsured for life insurance – unless you have a waiver of premium rider on your policy.
A waiver of premium life insurance policy rider pays your life insurance premiums if you become disabled.
This type of rider on life insurance policies is especially important for people with a high risk occupation, where your job puts you at a greater risk of disability.
According to the American Council of Life Insurers 87 percent of all life insurance policies “In Force” in 2010 included a rider for waiver of premium to cover disability of the insured.
When Does a Waiver of Premium Coverage Start?
With a waiver of premium rider on your life insurance policy the coverage does not start right away after you become ill or injured.
The typical life insurance policy requires a waiting period of at least 6 months after you become disabled, before your premiums for your life insurance policy are covered. Which means, you need to keep paying your premiums for life insurance for the first 6 months you are disabled.
However, the life insurance carrier will reimburse you for those paid premiums after the waiting period has expired (6 months).
In addition, if you have a recurring disability, you only have the six month waiting period the first time you become disabled, not every time for the same disability.
There is not a limit to the number of times you can use your disability rider for waiver of premium on your life insurance.
But, if you have a new disability unrelated to your prior disability, you will have to wait the six-month period before being reimbursed.
Most life insurance riders for waiver of premium are available for policyholders between the ages of 18 and 60, but each insurer may have different requirements for this additional coverage.
However, waiver of premium coverage usually ends at age 65 on most life insurance policies.
With waiver of premium the goal is to protect earned income, so if someone is already retired, there is no earned income for the policy rider to protect.
What Factors Impact the Cost of a Waiver of Premium Rider?
Several factors will determine the cost of your waiver of premium, including:
For example, on a term life insurance policy – which has much lower premiums compared to permanent life insurance – the waiver of premium rider may cost up to 10-15% of the total annual premium for your policy.
However, on a permanent life insurance policy, a waiver of premium rider may cost up to 3-5% of the total annual premium for your life insurance coverage.
Waiver of Premium Coverage for High Risk Occupations
If you work in a profession considered high risk for life insurance, you may find it more expensive and more difficult to get life insurance that includes a waiver of premium rider.
Life insurance companies analyze the risk associated with waiver of premium coverage by reviewing your type of occupation.
Some insurers have their own job rating system while others use the rating system developed by the state insurance commissioner.
If you are employed in a high-risk job with a “no” rating, you may find it very difficult to get waiver of premium coverage for your life insurance policy.
For example, pilots, police officers and firefighters are among the high risk occupations that usually fall within the category of a “no“ rating.
In addition, there are some jobs that may not seem so risky, but do have a higher than average risk of illness or injury which may keep you from working.
Some High Risk Job Classifications Include:
Some of the leading causes of disability leave are back injuries or back pain. Many of the occupations in the list above involve some heavy lifting or moving of patients as with Nurses.
In addition, other factors may limit your ability to get a waiver of premium rider for your life insurance policy, such as, taking part in high risk sporting activities like skydiving or scuba diving.
Or, if you are in poor health you may find it difficult to get covered for a waiver of premium. And, your age may have an impact on your approval for coverage.
Factors that may affect your ability to get covered for waiver of premium or charge a higher premium for the coverage include:
Each of the above mentioned factors may result in you not being approved for a waiver of premium or having to pay a higher premium for your rider.