Policy Riders for Disability Protection

Question 1

What is a Waiver of Premium Rider?

List 5 facts about the rider?

Answer 1

The waiver of premium rider (or waiver of monthly deductions rider) is one of the most common and popular riders added to a life insurance policy.

1. requires that the insured be totally disabled for 4-6 months before the waiver begins. This is called the “waiting period.”
2. insurer refunds the premiums paid during the waiting period
3. insurer waives future premiums (premiums paid for by insurer).
4. policy cash value continues to grow
5. maximum age restriction—age 65 or 70 is common and premiums are waived up to that maximum age (or two years, if longer).

Question 2

What are the 2 Definitions of Total Disability?

Answer 2

Some insurers define it as

1. the inability of the insured to perform the duties of his/ her own job (the so-called “own occupation” definition).
2. the inability of the insured to perform the duties of any job for which he or she is reasonably suited by education, training, or experience (more restrictive).

Question 3

Universal Life Disability Waivers

Why does UL need its own waiver?

What are the 2 forms a UL waiver can take?

Answer 3

The traditional waiver of premium rider works only when the policy premium is a fixed amount payable on a scheduled basis.

As such, it cannot work with a universal life (UL) policy because of the premium flexibility that characterizes UL.

For UL policies, a disability waiver can take one of two forms:

• waiver of stipulated premium (a preset premium amount)
• waiver of cost of insurance (the exact cost of the insurance).

Question 4

Disability Income Benefit Rider

Monthly income is calculated 2 ways.

List 2 other important facts about the rider?

Answer 4

A disability income benefit rider

pays a certain sum of monthly income to the insured if he or she becomes disabled.

The insurer calculates the monthly income payment in one of two ways:

• as a percent of the face amount
• as a set number of dollars per month per $1,000 of coverage

If the insured recovers, the monthly disability payments stop.

Most income riders also include a waiver of premium so you don’t have to get it separately.

Question 5

What does a Payor Benefit Rider (Juvenile Insurance) protect against?

How long will it stay in effect?

Answer 5

It ensures that a child’s life insurance stays in force by waiving the premium payment if the premium payor dies or becomes disabled while the insured is still a minor.

The payor benefit sets the terms for when and how long the premium waiver stays in effect.

stays in effect until the payor recovers or the child reaches a certain age (typically ranging from age 21 to 25).