Waiver of Specified Premium Rider (Disability Credit Rider)
carriers allow a Waiver of Specified Premium Rider (WSP) that can be significant in size. This may alternatively be referred to as the Disability Credit Rider (DCR). If one can qualify for the amount of life insurance involved, you may be able to attach a Waiver of Premium Benefit that, in the event of total disability, would waive up to a large amount of annual premium. Coupled with the ability to make participating loans on the resulting cash value, this is like being able to receive a huge addition per year in disability income insurance! There is at least one carrier that allows a Waiver of Specified Premium Benefit to its policies for people as old as age 60 (others up to age 55). A qualifying disability usually must commence prior to age 65.
If you are using the IUL policy to save for things such as college education or retirement, the Waiver of Specified Premium Rider serves to make these goals self-completing in the event the person is unable to work and earn. Imagine asking your 401(k) or 529 Plan provider to continue making deposits into your account if you are sick or injured!
Business applications for the Waiver of Specified Premium Rider include: providing money to fund a Buy - Sell Agreement triggered by an owner's disability; allowing an employer to pay a disability benefit selectively to certain key employees; and to help a business owner to meet payroll and keep the doors open for a period of time in the event of his disability.
Traditional disability insurance is limited as to the amount one can receive – usually 60% or so of earned income up to $30,000 or so per month. Use of the Waiver of Premium Rider can surpass that number, be paid in addition to any other disability income insurance, and can be especially useful for high-earners or those that wish to fund a buy-sell agreement triggered through disability.
One of the best Waiver of Specified Premium Riders we have found retroactively waives all premiums from the first day of disability if the insured has been disabled at least 4 months. Their definition of disability is the person's own occupation for the first 5 years, followed by any occupation for which the insured is reasonably fitted based on education, training, or experience. If disability begins prior to age 60, premiums might be waived for the rest of his or her life.
For a Specimen of the language contained in this benefit, click here
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