Waiver of Premium

The waiver of premium (also known disability waiver of premium, WPD, or WP) is a feature of many insurance policies. Both disability insurance and regular insurance policies may include this. The basic way it works is if you become disabled due to an accident or illness or any other health problem that your policy defines as a disability, your premiums are waived and you no longer have to pay them.

Waiver of premium is a very positive feature to have in a disability insurance policy because essentially it means that you will have extra money to help pay your expenses during the difficult time of disability. Waiver of premium is a special feature that may be separate than the basic policy you purchase and may cost extra. So for some policies, you must purchase the extra "rider" along with your basic policy.

So when you are shopping for a disability insurance policy or regular insurance policy and you are comparing all of the policies you are interested in, be sure that the policy you are planning on purchasing includes a waiver of premium, either as part of the original policy or else make sure there is an option to buy it. Without a waiver of premium, you will find that you may have to continue paying premiums during your disability in order to keep the policy in effect.

And money will be tight enough as it is because disability insurance usually pays only a portion of your lost income. Generally, the portion of your income paid by the insurance company is between 50% and 70%. That doesn't include any income brought in by a spouse, personal assets, or any other non-work-related income.

For the waiver of premium feature of a disability insurance policy to begin, you usually must be disabled for a certain period of time specified in your particular policy. This length of time is called the elimination period, or the waiting period. Common lengths of time that you must be disabled for are 30 days, 60 days, 90 days, and 180 days. Once the waiting period after you become disabled has ended, you will no longer be charged the monthly premiums while you are disabled and receiving disability benefits. Also, you may need to be totally disabled to qualify for the waiver of premium.

Another great benefit of many policies with a waiver of premium feature is that once this feature starts, you will be refunded the premiums that you had been paying for the past 30 days or whatever the specific length of time is mentioned for your policy. After the waiting period is satisfied, you will not only be able to stop paying premiums, but you will be given back the money that you had been paying for premiums since your disability began.

If you are disabled and eligible for waiver of premium on a policy anniversary, some insurance companies will waive an annual premium. And the waiver may continue until the next policy anniversary, even if you recover sooner and are no longer disabled.

If you have regular insurance rather than disability insurance and your company is offering the waiver of premium, it may or may not be that great of a deal for you. The rider is usually fairly cheap, but if this is your only insurance against a disability, it won't protect you for long. The waiver of premium will only save you the few hundred dollars you pay each month for insurance premiums. However, your cost of living is much higher than that amount and this waiver usually only lasts for a designated period of time or until you have covered from your disability.

So while you will be saving a bit of money, you should consider purchasing a separate disability insurance policy. Disability insurance is designed to replace your income when you are no longer able to work. A good policy will allow you to meet your financial obligations, and many disability policies also come with a waiver of premium feature as well.