Waiver of Premium
A waiver of premium is a policy feature that allows insurance coverage to remain active without requiring premium payments if the insured person becomes totally disabled and unable to work. It protects policyholders from losing coverage during a period of financial hardship caused by disability, ensuring that benefits such as life, disability, or health insurance continue without interruption. The insurer waives future premium payments while maintaining all original policy benefits.
How It Works
Waiver of premium is a contractual benefit, sometimes offered as a rider, that suspends premium payments once the policyholder meets the insurer's definition of disability, and it keeps the premiums waived for as long as that disability continues so the coverage does not lapse. In Canada this benefit appears in many long-term disability, life, and mortgage or creditor insurance policies. To claim it, the insured submits a claim with medical evidence confirming they cannot work, after which the insurer reviews the file and decides whether the disability test is met. If the claim is approved, premium payments stop while the coverage stays active. It is important to understand that waiver of premium is not the same as disability insurance: disability insurance pays an income-replacement benefit, while waiver of premium only keeps a policy active without an ongoing premium obligation.
Example:
A Canadian employee covered under a group plan that includes life plus health and dental benefits becomes totally disabled and is approved for long-term disability. Under the plan's waiver of premium benefit, the insurer stops requiring the life premiums, and in some programs the health and dental premiums as well, while the disability continues, so the coverage stays fully in force without the employee paying for it. The employee may need to submit periodic medical updates, and premiums resume once they recover and return to work.
What to Watch For:
The standard waiting, or elimination, period for a waiver is generally six months from the last day worked, and an application should typically be made a month or two before that period elapses. You must keep paying premiums until the waiver is approved, after which the insurer may refund payments made during the waiting period, and some policies require periodic medical updates to confirm the disability is ongoing. Coverage protections vary by program: when a member satisfies the definition of disability, some group insurers waive the life insurance premiums for the member and their dependants throughout the benefit period and keep the coverage in force even if the group plan is terminated or the member's employment ends. Some Canadian group programs extend the waiver to health and dental coverage so those premiums are also waived while coverage continues, though most other health and dental policies do not offer this benefit.
