Definition
Waiver of Premium
Waiver of premium is a rider under which the insurer pays future premiums on the policyholder's behalf if a defined event such as disability or critical illness occurs.
If the insured suffers a covered contingency, total permanent disability, critical illness, or in some designs the death of the proposer in a child plan, the insurer waives all remaining premiums while keeping the policy fully in force, so the benefits continue uninterrupted.
Waiver of premium is especially valuable on child plans, ensuring the maturity benefit is paid even if the premium-paying parent dies or is disabled. It is a low-cost rider that protects the policy's continuity precisely when the family can least afford to keep paying.
Related terms
- Critical Illness CoverCritical illness cover pays a lump sum on first diagnosis of a listed serious illness such as cancer, heart attack or stroke, regardless of treatment cost.
- Add-On CoverAn add-on (or rider) cover is an optional enhancement bought with a base policy to widen protection for an extra premium.
- Child PlanA child plan is a life insurance policy designed to build a corpus for a child's education or marriage, with features ensuring continuity if the parent dies.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.