What is a "waiver of premium" rider?

The waiver of premium rider is a provision often included in life insurance and disability insurance policies. It allows policyholders to skip premium payments without losing their coverage if they become disabled and unable to work. This rider is particularly beneficial for individuals who may face financial strain due to their disability, as it ensures that they maintain their insurance coverage even during a difficult time when they might not have a regular income.

Having this rider can provide peace of mind to policyholders, knowing that if they encounter a serious health issue that prevents them from earning a living, they will not lose their insurance benefits. This rider usually specifies a waiting period that the insured must endure before the waiver takes effect, ensuring there is a defined threshold for qualifying for this benefit.

The other options do not accurately describe the function of a waiver of premium rider. For instance, a policy guaranteeing coverage for life does not address premium payments in the context of disability, while clauses that increase premium rates after a claim or those allowing for premium refunds upon termination serve different purposes unrelated to maintaining coverage during disability.