Glossary · UK
What is Waiver of Premium?
An optional add-on to a life, critical illness or income protection policy that pays the premiums on the policyholder's behalf if they become unable to work due to illness or injury.
Full Definition
Waiver of premium is an optional benefit that can be added to life insurance, critical illness cover or income protection insurance, which keeps the underlying policy fully in force by paying the premiums on the policyholder's behalf if they are unable to work because of illness, injury or disability for a sustained period, usually after a deferred period of around six months similar to the deferred period on an income protection claim. Without waiver of premium, a policyholder who could no longer work and pay their premiums would risk the policy lapsing exactly when they might need its cover most, such as during a long period of sickness before an income protection claim starts paying out, or during a serious illness that has not (yet) triggered a critical illness claim. The benefit is usually available as an add-on for a modest increase in premium, and insurers typically require the policyholder to satisfy the same, or a similar, definition of incapacity used elsewhere in the policy (often based on being unable to carry out their own occupation, or any occupation, depending on the policy) before the waiver kicks in and premiums stop being collected while remaining fully paid from the insurer's perspective.