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Life insurance can be a financial safety net that can protect you and your loved ones. Paying your premiums on time can prevent your policy from becoming void. What happens when you sustain a critical injury or fall ill which stops you from earning an income? Will you still have to pay your premiums? Here is what you need to know when it comes to having your premiums waived.
What is a premium waiver?
Life insurance policies come with a range of features that can be adjusted to suit your lifestyle to ensure that you are adequately covered. Having your premiums waived basically means that your insurer will not have to pay your policy premiums during the period in which you have sustained a critical injury or illness. It can also be applicable in the case where you become unexpectedly disabled that prevents you from working. Therefore, resulting in you being unable to pay off your monthly premiums.
When will it be applicable to you?
Insurers have different definitions of what it means to be disabled or to be ill in order to effectively add the premium waver to your policy. Therefore, you will have to check your policy in the product disclosure statement or speak to your insurer to check if it is applicable to your situation. A waiver can be applicable to you if you
Will this automatically be added to my policy?
- Disability: If you find yourself unable to work due to suffering a disability for an extended period of time, you can get your premiums waived. Most insurers define disability as not being able to perform a certain number of daily living activities. You may not be eligible if you have sustained an injury that has resulted in your disability from a high-risk manual occupation.
- Being involuntary unemployed: This is applicable if you are unable to work for three consecutive months. Your insurer will request that you provide proof that shows this. They are also most likely going to add this waiver if you have also held your policy for more than 6 months.
This is a life insurance feature that you can choose to have added to your life insurance policy. This could come with an increased premium to provide adequate cover in the event when you are unable to pay off your premiums. This is why it is vital that you check the product disclosure statement (PDS) to see if this feature is available.
Other considerations
Having adequate cover can give anyone peace of mind. A premium waiver is just one of those handy features that can do this for you when things take an unexpected turn. Remember to inform your insurer as soon as possible if you find yourself in a predicament where you will not be able to meet the monthly payments on your policy to avoid having it becoming void.
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