Income protection insurance: what does ‘waiver of premium’ mean?

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In short, ‘waiver of premium’ literally translates as meaning an income protection insurance policy provider will forego, or surrender, any premium payments owed by the policyholder in the event of them declaring themselves unable to continue with their existing employment occupation on account of either being incapacitated by a serious injury sustained or being diagnosed with a medical condition which severely compromises their ability to continue to carry out the tasks as part of their remit; should a claim be filed at the onset of either of these scenarios.

Essentially it’s common practice that income protection insurance policyholders maintain premium payments – despite being classed as unable to work – so as to validate an existing policy. However, if you consider taking out a ‘waiver of premium’ feature this provides extra cover on any payments necessitated during this period in which you’re incapacitated. Although this clause will normally only be activated after 26 weeks of incapacity been proven and only then if the circumstances instigating this satisfy the following qualifying criteria typically laid out by the insurance provider:

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  1. The policyholder MUST be accepted on standard rates
  2. ALL premiums must have been paid up until this juncture
  3. The ‘waiver of premium’ commences BEFORE the policyholder’s 55th birthday
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Once this option is exercised then, generally-speaking, this procedure will be stringently adhered to until such time as the income protection insurance policyholder returns to fitness (and subsequently declares themselves fit to return to employment) or the policy reaches its natural conclusion (term ends).

Or, should the policyholder no longer be deemed as qualified for waiver of premium status.

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Effectively it works on different levels and to different ends based on the specific type of income protection insurance product the policyholder signed-up to in the first instance, while the term ‘incapacity’ alters re: cause and effect with each category of insurance. In a nut-shell, particular ranges of normal work tasks (and every day movements for that matter) are evaluated so as to determine the level of incapacity; and moreover just how this might affect the policyholder’s fundamental abilities to carry out the very nature of the tasks that they’re habitual occupation demands.

These are typically broken down into the following areas, so that the income protection insurance provider can get a better understanding of the degree of the injury/illness before ruling the claim in or out; both before and during any term of policy. Covering ‘specified work tasks’ these functional assessment tests include;

Walking – The ability to walk more than 200 metres on a level surface

Or alternatively;

Walking – The ability to walk a distance of 200 metres on flat ground with or without the aid of a walking stick and without stopping or experiencing discomfort

Climbing – The ability to climb up a flight of 12 stairs and down again, using the handrail if needed

Or alternatively;

Climbing – The ability to climb up a flight of 12 stairs without stopping or suffering severe discomfort.

Lifting – The ability to pick up an object weighing 2kg at table height and hold for 60 seconds before replacing the object on the table

Bending – The ability to bend or kneel to touch the floor and straighten up again

Or alternatively;

Bending – The ability to get into or out of a standard saloon car and the ability to bend or kneel to pick up an object from the floor and straighten up again

Getting in and out of a car – The ability to get into a standard saloon car, and out again

Writing – The manual dexterity to write legibly using a pen or pencil, or type using a desktop personal computer keyboard.

Or alternatively;

Writing – The physical ability to write legibly using a pen or a pencil without aid

Communicating – the ability to answer a telephone and to take a message

Reading – Having the required eyesight (corrected if necessary) to be able to read a daily newspaper

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