Premium Waiver Benefit is a type of futuristic premium payment which are waived off in specific conditions. The benefit under this scheme is usually reaped in events of disability or death of the insurer. Many of the policies by LIC comes with premium waiver benefit however some may be chargeable for attaining advantages under this scheme. In case of unforeseen circumstances, the insurer may lose a source of income so the policy will be operative while the payments of premium will cease.
Premium Waiver Benefit is the non- liked plan, in which the rider has to be separately purchased with the base plan. The rider is a waiver for future premium payment if the insurer faces unforeseen circumstances until the term of the rider is completed. The insurer has the choice of selecting the rider during the policy term of the base plan. The term for paying the premium for the rider is a minimum of five years.
Benefits of Premium Waiver Benefit
Premium Waiver Benefit provides various benefits which are described below
Benefit at Death
In case the insurer dies before completing the rider term, the premiums that are to be paid for the base plan are usually incurred by LIC. However, other than these riders, other sub-policies under the base plan will not be waived off by the company. Thus, it must be paid as per the pre-existing terms and conditions of that specific rider.
Premium Paying Term under the base policy has exceeded the rider terms, then the premiums due from the expiry date of this rider will be paid by the insurer.
Benefits at Maturity, Surrender, and Paid-up Value
Since, the rider is a sub- policy under the base plan, hence there are no maturity benefits payable to the insurer. Also, if the policyholder wishes to surrender the base plan there will be no surrender value paid on the rider. The insurer is also not entitled to any paid-up value for surrender or termination of the rider.
Profit Participation Benefit
Policy Holder will not receive any bonuses as the rider has no right in participating in Corporation Profits.
The Rider under Life Insurance policies are usually purchased additionally with the base plan, it helps the insurer in receiving extra coverage with the base plan. The insurer can customize the plan while purchasing the riders, thus the policyholder might receive additional coverage in case of death and disability risk. The premiums paid for this rider are Tax- Free under the Income Tax Act.
The premiums paid for the Premium Waiver Benefit Rider are very affordable as compared to other additional policies taken for life insurance. Thus, by purchasing the rider, the insurer saves money with additional coverage that is not part of the base plan.
Exclusion under Premium Waiver Benefit Riders
The rider will not be applicable if injury or accident is self-inflicted. If the policyholder commits suicide, the rider will be automatically terminated without any benefits to the nominee. LIC will not authorized any claims for the rider if suicide is committed within 12 months after taking up the policy. Besides, the nominee will receive 80 % of the premiums paid for the base plan.
For attaining LIC Premium Waiver Benefit Rider, the company has set fixed eligibility criteria.
|Minimum Entry Age||18 years|
|Maximum Entry Age||55 years|
|Age at Maturity||70 years|
|Term of the Rider||Premium Paying Term of the base plan is applicable while opting for the rider. The minimum outstanding term of the rider is 5 years, hence it should opt 5-6 years from the date of expiry of the base plan.|
|Sum Assured||The insurer will receive the sum assured for the futuristic payments payable for the base plan|
Frequently Asked Questions
- What is a Premium Waiver Benefit Rider?
If the insurer meets an unexpected scenario, during the term of the base plan. This rider will help insurers in waiving off futuristic premium payment to keeping the policy active.
- What are the circumstances under which the rider will be operative?
The insurer can avail rider when he/ she is disabled for a minimum of 6 months. The rider is also operative if the insurer is diagnosed with critical ailments like cancer and vascular diseases.
- Can the rider be added or removed from the base plan?
The insurer can add the rider additionally during the policy term of the base plan. However, they are no option for removing the rider.
- Who is eligible for opting for the rider?
Any individual who is aged from 18 to 65 years are eligible?
- What documents will be needed for claiming the benefits?
In case of disability or death, documents like duly filled form, copies of the original policy, ID proofs, and current address of the policyholder. The other supporting documentation will be a copy of the bank passbook, medical report stating health issues, disability certificates from the government.
- Do I have to wait after applying for the rider?
The insurer will have to wait for 90 days after he/ she has contracted critical ailments or is suffering from permanent disabilities.
- What will be the cost of premiums of the rider?
Age and gender might be deciding factors for paying premiums. However, the premiums of the base policy will also be determinant for the rider cost.
- When will be rider terminated?
The rider will be terminated if the base plan expires. Also, if the benefits of the rider coverage are paid off then the insurer will not receive any further benefits. If the policyholder attains more than 65 years.
- Are there any exclusion under the rider coverage?
The insurer will receive benefits only if he/ she is suffering from critical illnesses like HIV, congenital infections, invasion under war or riots, and others.
- Are there any tax benefits associated with the riders?
If the premium is paid up to 1 lakh, then the insurer will be exempted from Tax under section 80 C. The section 10 (10D) the benefits reaped from the rider are tax-free.