Insurers know that life can change in the blink of an eye and that’s why waiver of premium exists.
If you have to stop working or reduce your hours due to unexpected illness or injury, it can be stressful to think about how you’d keep up to date with your life insurance premiums.
Waiver of premium means that this expense is taken care of and it’s one less thing for you to worry about.
What is waiver of premium?
Waiver of premium is a policy benefit that you can add to your life insurance for an additional cost.
It essentially waives your life insurance premiums if you become too ill or injured to work, meaning you won’t have to pay them during this time.
It helps to give you peace of mind that you won’t fall back on your premium payments during hard times.
How does waiver of premium work?
You’ll need to add waiver of premium to your policy during the application, it’s not something you can add later down the line.
If you become too ill/injured to work during your policy term, you can contact your insurer to make a waiver of premium claim.
Once a waiting period has passed and a claim has been accepted, your policy will remain in place without you having to make your monthly premium payments.
This will continue until you return to work, until your policy expires or until you reach a specific age (this age limit can vary between insurers but is usually around 60 - 65).
You can make multiple waiver of premium claims throughout your policy term.
How do I make a waiver of premium claim?
Firstly, you’ll need to have been unable to work for a specified ‘waiting period’.
You’ll also need to meet the insurers ‘definition of incapacity’. This essentially means they have set definitions of being unable to work.
Most insurers will use one of the following definitions:
- Own occupation – you are considered as too ill/injured to work if you can’t do your specific job.
- Suited occupation - you are considered as too ill/injured to work if you can’t do your specific job or a similar job (based on your qualifications and skills).
- Any occupation - you are considered as too ill/injured to work if you can’t work in any occupation. With this definition you could also be assessed on your ability to carry out small daily tasks such as writing your name, walking, climbing stairs, getting out of a car.
To start the claims process, you’ll need to contact your insurer. It’s likely they’ll ask for relevant medical information, this could be in the form of:
- A copy of your medical records and a doctor’s report
- A report from an assessor (arranged by the insurer)
How long does waiver of premium last?
Once a claim has been accepted, your premiums will be covered until one of the following happens:
- You recover and can return to work
- You no longer meet your insurers definition of being unable to work
- Your policy expires
- You reach a certain age (usually retirement age)
How much does waiver of premium cost?
The price of waiver of premium can vary between the different insurers.
If it’s something you’re considering adding to your policy, you might want to shop around and get multiple quotes.
Getting multiple quotes means you can choose the insurer who offers you the best deal.
You could save time and money by using a comparison site (like Confused.com) to compare multiple insurers at once.
Is it worth it?
If you're worrying about keeping up with premiums if you can't work, waiver of premium could help.
If you were to fall behind on your payments, you would risk your cover becoming invalid and no pay out would be made to your family when you die.
It could be particularly useful if you don’t have savings or other forms of financial protection to fall back on.
While it does add an extra amount to your premium, it could help to protect you from the unexpected.
Below are the pros and cons of waiver of premium:
| Pros | Cons |
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If you can't work due to long term sickness and would struggle to keep up with premiums, it can cover you.
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It’s an additional benefit so you’ll need to pay extra in your premiums.
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You can make multiple waiver of premium claims throughout your policy term.
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Waiver of premium won’t kick in straight away, you’ll need to wait for a certain period of time.
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Payments can be covered until you’re well enough to return to work, leaving you to focus on recovery.
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It’s not something you can add to your policy at any time, you’ll need to choose to add the benefit when you buy your policy.
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In 2023, over 8 million UK adults (aged 16 – 64) reported having a long-term health condition that limits the amount of work they can do. With this in mind, it could be worth putting precautions in place.
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