Waiver Of Premium And
Accidental Death Benefit
Waiver of premium and accidental death benefit riders are offered by most
life insurance companies.
These riders are the less talked about
benefits of owning a life insurance policy. They can sometimes make such
a big difference.
Let us take some time to examine how the waiver of
premium and accidental death benefit riders work.
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Waiver Of Premium And Accidental Death Benefit
Many life insurance companies sell accident policies. Some are bought
for long periods of time and others for short periods of time. You can
buy a policy that would pay the face amount to your beneficiary if you
should die in any type of accident.
Some accident policies specify that
you must die in a specific type of accident...for example; an automobile
accident or an aircraft crash.
These are not the types of policies we
refer to when we talk about accidental death benefit riders. These are
separate policies. The ones we want to discuss here are the riders added
to a base policy. Let us look at
waiver of premium
accidental death benefit
riders in turn.
- Waiver Of Premium Riders
Probably the most popular rider added to a
life insurance policy
is the waiver of premium rider. For a very small fee, usually a few
cents per $1000 of life insurance, you can purchase a waiver of premium
rider which will become part of your base policy whether it be whole
life, term life, universal life or variable life...
If you should become disabled, as long as you are disabled for a
minimum of 6 consecutive months, the life insurance company will waive
your premium for as long as you are disabled even if it is for the rest
of your life.
Whenever you are healthy enough to return to work you pick
up your premium payment again and you owe the life insurance company
nothing for the months that you didn't pay the premiums. The policy
would just go on as if you never missed a payment.
the entire premium would be waived, however, when it comes to
universal life policies
variable life policies
the situation would be a bit different.
As universal life is made up of
term life insurance and saving and variable life is made up of whole
life insurance and an investment portfolio the premiums waived upon
disability would be limited to the portion of your payment applied to
the term insurance and the whole life insurance respectively.
An important thing to remember adding a waiver of premium rider
is the definition used by the life insurance company. There are still
many life insurance company which suggest that you are disabled when you
cannot engage in any occupation because of illness.
almost guarantees that your premiums may never be waived. In other words
if you can do any type of work you are not considered disabled.
The type of definition you need is one that states that if you
cannot engage in your "own occupation" then you are disabled. In other
words if you are unable to engage in the occupation for which you are
trained and in which you are now employed then you are disabled.
be able to do some other type of work for a reasonable monetary
consideration but it is not the occupation that you are trained for and
in which you were engaged at the time of the inset of your disability.
You are disabled. Look out for this as you would be surprised at the
number established life insurance companies who still use the antiquated
and misleading definition.
- Accidental Death Benefit Rider
Another very popular rider that you may want to add to your
base life insurance policy, whether term, whole life, universal life or
variable life insurance policy is the accidental death benefit rider.
This is sometimes referred to as the "double indemnity clause". This
rider legally binds the life insurance company to pay to your
beneficiary double the face amount of the policy if you should die in an
There is a nominal fee for the inclusion of this clause into
your policy. Some life insurance companies allow you to purchase what is
referred to as "triple indemnity". Your beneficiary would be paid three
times the face amount in this case. Of course you pay additional for
Let us suppose you died in an automobile accident, in a plane
crash or in fact any situation that can be considered an accident the
life insurance company has to pay the additional amount.
however, engage in any occupation or avocation at the time of
application for the policy which would indicate that you would die in an
accident the life insurance company may refuse to issue the accidental
death benefit rider or charge you extra to add it.
These two riders, the waiver of premium and accidental death benefit riders may well be worth the minimal extra cost.
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