The Unemployment Waiver of Premium Rider
by Jack Le, CLU
The Unemployment Waiver of Premium Rider1 is an optional rider that waives your premium payments for your disability insurance during a period of unemployment. The main benefit of the Unemployment Waiver of Premium rider is that you remain eligible for disability benefits while you are unemployed and not paying for your policy due to your unemployment situation.
Premiums are waived for 12 months. Even if you regain employment before the end of the 12 months, your premiums will continue to be waived until the end of the 12 month period is used. With this rider, your disability insurance premiums will be one less bill to worry about during a break in your income stream due to a period of unemployment. At the end of the 12 months, you will resume paying for the policy from that point on.
No one would typically plan on becoming unemployed but periods of unemployment do occur. When that happens, the first thing you would naturally be inclined to do is cut cost every way possible. What if you had to cancel your disability insurance policy because you no longer have the income to pay the premiums? You bought your policy when you were younger and in overall good health. But when you regained employment you are older and no longer healthy enough to qualify for coverage again or qualify at an affordable price due to increase in age and / or deteriorating health.
You can easily be one of those routine calls that I get from existing clients requesting to cancel their policy due to a period of unemployment. Little would you know that you can suspend your disability policy without coverage for up to 12 months due to unemployment. After returning to work, no evidence of insurability or income is needed to put your policy back in force. OR, if purchased the Unemployment Premium Waiver rider, you can have the premiums waived for up to 12 months while maintaining eligibility for disability benefits. The option to waive the premiums while still eligible for benefits is the clear better option.
The Bureau of Labor Statics reports that unemployment rates hovered in around the 4s percentage points for 2017 but has been in the 9s as recently as 20102. You can easily become part of the unemployment statistics at some point in your career. That is why it is important to plan accordingly for all life events.
The Unemployment Waiver of Premium Rider can be used multiple times during your career as long as there has been 48 months since the end of the previous unemployment period. The rider is renewable until your attained age of 60.
To utilize the Unemployment Waiver of Premium Rider, you must notify the insuring company about your unemployment. After applying for unemployment benefits, provide the determination letter from your state or federal agency responsible for providing you unemployment benefits. After receiving unemployment for at least 60 consecutive days, your disability insurance premiums will be waived under the terms of the Unemployment Waiver of Premium Rider.
The cost for the Unemployment Waiver of Premium Rider is quite small compared to other optional riders available. Ask your agent to include this rider onto your quote.
Jack Le, CLU® holds a Financial Representative contract with The Guardian Life Insurance Company of America based out of New York, NY. Individual disability insurance policy Forms 18ID, 18UD, and 18GI underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Product provisions and availability may vary by state. In New York: These policies provide disability insurance only. They do not provide basic hospital, basic medical or major medical insurance as defined by the New York State Insurance Department. For policy form 18ID, the expected benefit ratio is 50%. For policy forms 18UD, 18GI, 18UD-F, an 18GIF,the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums that the company expects to return as benefits, when averaged over all people with these policy forms.
1Optional riders are available for an additional premium. Otherwise approved. 1If you choose to have an optional rider on your policy your premium will increase.
2018-54782 Exp: 02/20