…when you’re critically ill or disabled
Two neighbours’ daily routine of watering plants leads to an interesting conversation.
Sindu: The hydroponic farm is open for everyone and they have waived the entry fee too. We should go visit the farm.
Bindu: I am not sure. I think the farm will not charge an entry fee provided we make a purchase for at least ₹3,000.
Sindu: So what? We get nice plants. It is always about cost versus benefits. Just like in life insurance.
Bindu: I get your point. That is for plants but how so for a life policy?
Sindu: Life insurers offer ‘waiver of premium’ clause where they waive the premium if the person insured meets with an accident resulting in disability or if he/she falls critically ill.
Bindu: Interesting. Can we waive the premium? I mean can we choose not to pay the premium?
Sindu: No. Waiver is something that is offered by a life insurance company. If you stop paying the premium, that will lead to termination of your policy and you will not be given any life cover. Premium is waived only under two circumstances as I just mentioned. A few insurers do waive the premium if you report any terminal illnesses as well. The list of illnesses (both critical and terminal) will be available with the insurer. So, be sure to check it.
Bindu: For how long do I get the waiver?
Sindu: Your outstanding premium gets waived for the entire policy period. As a policyholder you continue to enjoy the life cover until the policy term.
Bindu: I am assuming this is available only with term policies?
Sindu: Mostly yes. But since it is a rider, life insurers may provide it with other life policies as well. This will be mentioned in the policy document. This rider may be available with a few child insurance policies as well. The ‘waiver of premium’ rider gets activated when the parent passes away. It ensures that the policy continues to be in force and insurers invest the premium regularly, and the maturity amount is given to the child after the promised number of years.
Bindu: Is this an in-built clause in life policies?
Sindu: No. Mostly, insurers offer this as a rider, which means, you will have to cough up additional premium for it.
Bindu: Of course I should pay extra. So, how do I decide if I should go for this rider?
Sindu: It depends on how much premium you can pay comfortably. This rider will cost you extra. There are products in the market that come with built-in riders. You can consider such policies as well, if you want to opt for this rider. But here too, the policy will cost you extra when compared to a plain-vanilla term cover.