Premium Waiver

Waiver of premium in a disability insurance policy serves precisely the same function as it does in a life insurance policy: after a period of disability, the premium is waived.  There are differences, however.

In most disability income insurance policies, the waiver of premium benefit requires that the insured be disabled for a period of at least 90 days.  (You may recall that the provision in a life insurance policy usually requires a 6-month period of disability.)  In a waiver of premium provision the insured's disability for a 90-day period will cause the insurance company to waive all future premiums during the continuation of disability and refund those premiums paid during the 90-day period.  Another difference in the waiver of premium benefit in a disability policy is that the disability may be either total disability or residual disability.

The waiver of premium benefit just described is the basic waiver of premium benefit.  The waiver of premium benefit, however, has been enhanced.  One of the most liberal variations of the basic waiver of premium benefit provides for a waiting period for waiver of premium that is the lesser of the elimination period and 90 days.  The result of this enhancement for an insured with a 30-day elimination period is that premiums are waived after 30 days of disability.