subject: Waiver Of Premium Life Insurance As Necessary As Disability Insurance [print this page] The chances of you dying are slimmer than facing a really debilitating disability that could rob you of your ability to earn an income.
So why would a life insurance aggregator website bring up this fact? Because a disability that results in the loss of livelihood directly affects your ability to pay premiums and keep a policy active, which does not bode well for many families with disabled breadwinners who need every form of help and reassurance they can. Wouldn't it be nice to have a stopgap measure in place to take care of payments like life insurance and car insurance to make sure that things go on as usual as far as your finances went? Well, some may say that is expecting too much.
With life insurance, such a measure is made possible with the help of the Waiver of Premium rider on term life insurance. Term life is a temporary form of life insurance cover that does not provide guaranteed death benefit, unlike permanent life insurance. Buyers across the world choose term life insurance instruments because they are affordable, easy to understand and fit in well with financial plans that have retirement and savings plans in money market funds, investment accounts and other vehicles like the 401(k), Roth IRA or the 529 Plan for college. The Waiver of Premium rider is yet another great feature offered on almost all term life policies that allows you to stop making premiums payments if you have a long term disability for 6 months or more which is affecting your ability to make life insurance payments. The life insurance policy will remain in effect (essentially paying for itself) from the seventh month onward, knocking life insurance off your worry list. You can rest knowing that within the specified term for which the policy is expected to be valid, you'll be covered, with no questions asked.
The best part about the Waiver of Premium rider is that many policies allow it to be elected for free, early on when purchasing the policy. If you're lucky enough, you may be purchasing a policy from a life insurance company that offers a shorter waiting period at 90 days or 3 months. When it's offered for free, it's a no brainer. Take it! But even if you are charged a small price for the rider, speak with your carrier or agent about how it can be activated.
For those who are wondering how to make life insurance payments for the first six months until the Waiver of Premium rider kicks in, we suggest looking at other resources, like a six-month emergency fund (which every family should have; an emergency fund is as important a safety net as life insurance), borrowing from friends or family or cashing out smaller savings funds. Both, disability insurance and life insurance protection are so important to keep in force, especially when you have dependents relying on you.
If you're thinking that a disability is unlikely to happen to you, check these facts out. The US Census Bureau estimates that 11.4% of the country's population aged 21 to 64 years of age (or the "earning years") was disabled with a severe disability, out of which only 27.5% of those were still employed. Break that down in simplified arithmetic and it means that one in every ten of us in the category will face a severe disability in our lifetimes, out of which only one if every four of us will then be able to find any work. Non-severe disabilities also affect 5.2% of this age group, leaving 28.8% unemployed. It's still a high risk for those that are primary breadwinners in a family. The Census Bureau has a handy list online that helps decide what really constitutes a disability, available at http://www.census.gov/hhes/www/disability/sipp/disab10/figure_1.pdf.
You can also find quotes for short and long term disability insurance online at AccuQuote. For younger people in great health, buying your own policy (not through group coverage like the kinds available at work) may be a bit more expensive than buying your own policy. How this happens is because group life insurance clubs everyone in the same group and averages out their premium payments, which works great for those who are older or in not such great health because they're paying less than they ought to have. Not so for those that are healthier and are eligible for cheaper rates. Always compare quotes to see if you can save on all kinds of insurance, whether term life, short term disability or long term disability insurance. It will help you put the policies in perspective, both in terms of value and features offered, and help you make a better informed decision.
by: Pat Cassidy
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