Understanding Disability Waiver of Premium in Life Insurance Claims
Numerous insurance companies offer premium waivers for life insurance policies in cases of disability. With this provision, policyholders are relieved from making premium payments while their life insurance coverage remains in effect. Once evidence of disability is provided, the rider comes into force, and the policy continues as if premiums are being paid on a monthly basis. Typically, this waiver applies retroactively from the onset of disability, and any premiums paid during the waiver period are usually refunded.
Many policyholders choose to include this rider in their coverage because it relieves them from paying premiums during their period of disability, while the other aspects of the policy remain intact, such as the death benefit, dividends, and cash values. When the disability ends, the policy owner resumes making premium payments.
Difficulties arise when an insurance company denies a life insurance claim based on non-payment of premiums, while the insured believed that the premium waiver was in effect and no payments were required. The specifics of the Waiver of Premium provision can vary by contract, and each life insurance policy has its own definition of "totally disabled." If a claim is denied due to non-payment of premiums and the insurer asserts that the deceased was not totally disabled as defined in the policy, it is crucial to consult with a life insurance attorney.
Defining Total Disability in Life Insurance Claims
Generally, in the context of the Waiver of Premium provision, an individual is considered totally disabled if they are unable to perform the significant and essential duties of any occupation for which they are qualified, taking into account their education, training, or experience. This disability must be a result of an injury or illness.
- Material duties encompass the important and productive tasks associated with the occupation.
- Substantial duties encompass the quantity and quality of performance of the primary, productive, and/or significant duties of the occupation.
For instance, let's consider the case of Dennis, a car salesman at a large dealership. His material duty is engaging with customers to facilitate car sales. Selling and promoting cars is a substantial duty of his job, and the expectations regarding quantity and quality are known.
It is important to note that the definition of Total Disability for Waiver of Premium may differ from the definition used in Long-Term Disability (LTD) coverage, as it varies depending on the contract.
Notice of Claim in Life Insurance Claims
Many insurance companies require policyholders to provide a notice of claim when they become disabled. This notice must be submitted within 12 months after the individual ceases to be actively at work, which is typically the last physical presence at the workplace.
Numerous claims have been denied due to policyholders being deemed ineligible for the Waiver of Premium benefit or due to errors made by employers in submitting the appropriate documentation to the insurance company. If your claim has been denied because of non-payment of premiums during the supposed period of premium waiver, reach out to us for assistance.