Did you know: In addition to the Waiver of Premium benefits under your long-term disability policy(s), other policies may contain a Waiver of Premium provision? You may be entitled to Waiver of Premium benefits under a number of insurance policies.
Life insurance policies often contain a Waiver of Premium provision for disability, but the definition of disability and duration of the benefit varies dramatically. Disability Buy-Out (DBO) insurance and Business Overhead Expense (BOE) disability insurance may also contain Waiver of Premium provisions.
Check your policies to see:
•Whether they contain a Waiver of Premium provision;
•Under what circumstances the premium would be waived; and
•How the definition differs from policy to policy.
Most long-term disability policies contain a Waiver of Premium benefit if you become disabled. This provision, if included in your policy, states that premiums will be waived when a determination is made by the insurance company that you are totally or partially disabled.
To guarantee the insurance company remains on the hook for any potential future benefits, in the event you become disabled and that your policy remains in force, your premiums must be paid leading up to and until the time at which a disability determination is made. If disability benefits are approved, premiums paid during the Waiver of Premium benefit period will be refunded.
While under the typical group-employer-sponsored disability policy, insurance premiums are deducted from your paycheck or paid for by your employer; you must continue to pay premiums for any private, individual policies on you own. This is especially important because these policies are an asset. They are noncancellable, meaning that your policy remains in force no matter what happens—unless you don’t pay your premiums.
It usually makes sense to file a claim for Waiver of Premium benefits under your other policies at the same time you file your long-term disability claim.
For certain whole life insurance policies requiring contributions to cash value, the insurance company will actually continue to make the contribution to the cash value of the policy, in addition to the Waiver of Premium. That can be worth a substantial amount of money to you. But again, you have to look at each policy that you’ve purchased to determine what benefit you have.
So remember: Confirm that you have a Waiver of Premium benefit provision in your long-term disability policy(s) and in other policies you’ve purchased. Keep those premiums flowing unless and until you’ve had a determination that you are disabled and are entitled to Waiver of Premium benefits. And finally, if you have any questions or comments regarding Waiver of Premium, please don’t hesitate to contact me.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack