Waiver of premium
Waiver of premium is a provision or rider on a life, disability, health or long-term care policy that excuses specified premium payments after a qualifying disability or other stated event. The policy stays in force, while the rider sets the disability definition, waiting period, proof required, premiums covered and how long the waiver lasts.
Also called: waiver of premium rider
If you become totally disabled, a waiver of premium keeps your coverage going without you paying for it, as long as you meet the rider's terms. It does not send you money. The insurer credits or excuses the covered premiums, so the policy and its benefits stay in place. Until the insurer confirms approval in writing, keep paying, because a missed premium during the review can cause the policy to lapse.
How a waiver works during a disability claim
The New York Department of Financial Services describes waiver of premium as keeping your policy in force without further premiums if you become totally disabled before age 60 or 65, after an initial waiting period, according to its life insurance consumer guide (opens in a new tab). The example below uses a $500,000 death benefit and a four-month waiting period from an NAIC sample life policy (opens in a new tab). The $100 monthly premium is illustrative.
Hover or tap a row to highlight it.
| Step | Amount |
|---|---|
| Normal annual premium ($100 times 12) | $1,200 |
| Premiums due during the four-month waiting period ($100 times 4) | $400 |
| Premiums waived May through December if approved ($100 times 8) | $800 |
| Cash paid to you | $0 |
| Death benefit kept in force | $500,000 |
You may owe the $400 while the claim is evaluated, and a six-month wait would ordinarily mean six payments first, subject to any retroactive-payment provision. Premiums must stay paid until the insurer approves the waiver, because nonpayment can cause a lapse, under Insurance Compact standards for waiver benefits (opens in a new tab).
Rider terms that change when and how much is waived
Each of these terms shifts when relief starts or how much it covers.
- Waiting period. Examples include four months in the NAIC sample and six months in an AXA Equitable rider filed with the SEC (opens in a new tab). The Connecticut Insurance Department glossary (opens in a new tab) gives three or six months. A longer wait leaves more premiums due before approval.
- Disability definition. The rider may require inability to work in any occupation, an earned-income test or another defined condition. A medical condition alone may not meet it.
- Premium scope. Some riders waive only the base policy premium. Others also waive specified rider premiums, dependent coverage or universal life monthly deductions, as the AXA rider does for flexible-premium policies.
- Refunds. Some riders refund or credit premiums paid during the waiting period after approval; others waive only premiums due afterward.
- Other qualifying events. Compact standards allow life forms to name events such as facility care, hospice or home care, terminal illness, or inability to perform no more than two activities of daily living.
- Cost. Adding a rider increases the premium, according to the NAIC (opens in a new tab), and the rider may require evidence of insurability. Leaving it off at purchase may rule out a later claim.
Where you find the rider
The provision most often appears on individual term, whole life insurance, universal and variable life policies, and on group life through an employer or association. Disability income policies may waive premiums while benefits are payable, and long-term care policies may stop premiums once you qualify for and begin receiving benefits. On juvenile life policies, a related payor benefit waives premiums if the person paying for the child's policy dies or becomes totally disabled.
On paper, it appears as an optional rider on the quote, in the policy schedule or declarations, in the rider's own exclusions and conditions, on renewal notices and on claim forms. A binder may show the rider was selected, but the issued policy and rider control. Auto, homeowners and business policies use unrelated waivers, such as a waiver of deductible or subrogation.
How Connecticut and New York shape the waiver
In Connecticut, life policies, riders and endorsements must be filed with and approved by the Insurance Commissioner before use, under Conn. Gen. Stat. § 38a-430 (opens in a new tab). For a long-term care rider attached to a life policy or annuity, Conn. Gen. Stat. § 38a-458 (opens in a new tab) bars an additional elimination period and allows the waiver to be calculated from the time rider benefits become payable. Some long-term care policies start the waiver when benefits are paid, while others wait 60 to 90 days, according to the Connecticut long-term care shopping guide (opens in a new tab).
In New York, Insurance Law § 3215 (opens in a new tab) requires life and annuity policies with disability benefits, including waiver of premium, to address total and permanent disability. It permits a total disability definition based on inability to work in any occupation for pay or on an earned-income test, treats a refund of premiums paid as part of the waiver, and does not apply to group life policies. A waiver claim also needs its own proof of disability to the life insurer, because proof given to a disability income insurer does not settle it automatically, according to a DFS legal opinion (opens in a new tab).
Questions to ask an agent or insurer
Ask these before buying the rider or filing a claim.
- What definition of disability triggers the waiver, and does it require inability to do my own occupation or any occupation? A condition that keeps you from your job may not meet an any-occupation test.
- What is the waiting period, and must I keep paying during it? Unpaid premiums can cause a lapse before approval.
- Which premiums or monthly deductions are waived, including rider, dependent and universal life charges? Some riders cover only specified premiums.
- Will premiums I pay during the waiting period be refunded or credited after approval? Some riders give retroactive credit and others do not.
- What proof is required, how often can you ask for updated proof, and what notice confirms approval? The waiver is not automatic, and continuing proof may be required, per group term life Compact standards (opens in a new tab).
Frequently asked questions
These follow a close reading of the rider.
Does waiver of premium replace disability insurance?
No. It preserves coverage or credits premiums and does not provide money for rent, medical bills or lost wages. Income replacement takes a separate disability income policy or rider, according to the California Department of Insurance (opens in a new tab).
Is waiver of premium the same as a payor benefit?
No. A waiver of premium generally protects your own policy after you become disabled. A payor benefit protects a child's policy when the separate person paying the premium dies or becomes totally disabled before the child reaches a specified age.
How is it different from return of premium?
Return of premium refunds some or all premiums under a stated condition, such as death, cancellation or the end of a set period. It does not excuse future premiums because of disability unless the policy also includes a waiver provision.