Keeping up with your monthly insurance premiums when you take out a long-term policy like life insurance, income protection or critical illness cover is essential. If you don’t pay your premiums, the insurer could cancel your policy, leaving you unprotected.

Depending how long you’ve held the policy, it could be difficult to get similar cover in place again. If you’re older, it’s certainly likely to be more expensive. So maintaining the cover you’ve got is ideal. Waiver of premium is something you can add on to your policy as a way of supporting this.


How does waiver of premium work?

If you have a life insurance, income protection or critical illness policy with waiver of premium, you can activate the benefit if you’re signed off work for medical reasons. You’ll need to contact your insurer to do this.

Most insurers require you to be off for a minimum amount of time before you can activate your waiver of premium. This waiting period varies from insurer to insurer, but is usually between 3 and 6 months. On top of that, some insurers may not allow you to activate your waiver of premium benefit in the first 6 months of taking out a new policy.

To exercise your waiver of premium, you’ll need to meet your insurer’s definition of incapacity, which you agree to when you take out the policy. If possible, it’s a good idea to opt for ‘own occupation’ definition when adding this feature to your policy – because this means you can use your waiver of premium feature based on being able to do your own job (not just any job).


How does waiver of premium help?

Being too ill or injured to work can often lead to financial hardship, especially if you can’t work for a long time. Keeping up with your monthly insurance premiums could become difficult if you lose your income for health reasons. This is where waiver of premium can help.

Think of it as being a bit like insurance for your insurance policy. It makes sure a long period of ill health won’t lead to missed payments and the lapsing of your policy. In summary, having waiver of premium added to your life insurance, income protection or critical illness policy:

  • Makes sure you don’t miss payments if you can’t work for health reasons
  • Make sure your policy doesn’t lapse due to missed payments

How long does waiver of premium last?

If you add waiver of premium to your insurance policy, it will usually last for as long as you need it. This means your premiums will keep being waived until whichever of these happens first:

  • You’re well enough to go back
  • You no longer meet your insurer’s definition of incapacity
  • Your policy ends
  • You reach the maximum age for waiver of premium (usually 60-65)

How much does waiver of premium cost?

If you choose to add waiver of premium to your life insurance, income protection or critical illness policy, the monthly premiums you pay to be insured will increase very slightly. The price increase for this add-on is usually very low – often just a few pence per month.


How do I get waiver of premium?

When taking out life insurance or critical illness cover, you’ll have the opportunity to add waiver of premium to your policy. If this feature is important to you, make sure to add it at the start, as you won’t be able to add waiver of premium at a later date. Whether or not you’re eligible for waiver of premium may depend on the type of job you do (some insurers won’t add waiver of premium to your policy if your job is considered high-risk).

On an income protection policy, on the other hand, waiver of premium benefit usually comes as standard. As ever, it's best to check the policy conditions before taking out cover to find out if it's included.


Is waiver of premium worth it?

Waiver of premium can be a very worthwhile benefit to add to your life insurance or critical illness policy. It protects your policy in case you become unable to pay the monthly premiums for health reasons.

In the case of life insurance, this is particularly important as death can often be preceded by a long period of illness. Waiver of premium makes sure your policy stays in place, right at the moment when it might be needed. Similarly with income protection and critical illness cover, waiver of premium gives you relief from paying every month to be insured, right at the time when you’re too ill to work.

This can be extremely valuable; no-one wants their protection policy to lapse, especially if you’ve already been paying your monthly premiums for a long time. It gives you peace of mind at an otherwise difficult time, so you can concentrate on getting better without worrying about insurance payments.

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This article has been written as guidance. Anorak also provides regulated advice online and over the phone.