LIC’s Premium Waiver Benefit Rider

Introduction on LIC Premium Waiver Benefit Rider

A ‘premium waiver benefit’, as the name suggests, waves off the premiums that are to be paid in the future. Available as an add-on/ rider, LIC Premium Waiver Benefit Rider comes with a number of advantages. While buying an insurance plan, this product can be bought as an attachment to your base plan. In case of death of the insured individual (on whose life the rider is purchased) during the term of the policy, the future premiums will be waived off. 

While purchasing a policy from LIC or at any other time during the premium paying term, LIC PWB Rider can be opted for by paying a little extra. However, it should be kept in mind that the outstanding Premium Paying Term of the standard plan and the rider is a minimum of 5 years.

Benefits of LIC Premium Waiver Benefit Rider

The benefits available with the Premium Waiver Benefit in LIC are as follows: 

1. Death Benefit
   In case the insured member dies before the expiry date of an active policy, the premiums that were payable after the date of death would be waived off.
   It should be noted that any other riders that are purchased under the policy would not be waived off. Also, if the base policy premium paying term extends the term of the rider, the premiums due would have to be paid as per the terms of the base policy.
2. Maturity Benefit
   There is no maturity benefit in the LIC Premium Waiver Benefit Rider.
3. Participation in the Profits
   Being a non-linked, non-participating plan, the plan does not participate in any profits of the company.

Eligibility criteria of LIC Premium Waiver Benefit Rider 

Exclusions under LIC Premium Waiver Benefit Rider

In case the insured individual commits suicide within the first 12 months of policy purchase or within 12 months of policy revival, the rider will be void.

No claims would be accepted under such a situation. However, 80% of the premiums that have been paid towards the rider would be refunded, provided the policy is active. 

Working of LIC Premium Waiver Benefit Rider

Let us suppose that Mohit Kumar, at the age of 29, purchased a child plan by LIC for his newly born daughter. As per the plan when the child turns 21 years there would be a payout of INR 50 lakhs. The premium paying term is 15 years. Mohit has also opted for the LIC Premium Waiver Benefit Rider along with the base plan.

However, if Mohit, unfortunately, dies in an accident during the tenure of the plan, say after 7 years, then there are 2 possibilities. In case Mohit had not opted for the LIC PWB Rider, the plan would have paid the nominee the death benefit and would have been terminated.

However, as Mohit had invested in the LIC Premium Waiver Benefit Rider, his death would not bring an end to the policy. The upcoming premiums would be waived off and when his daughter turns 21, she would receive the sum assured along with any additions that are applicable as per the predefined schedule without disrupting Mohit’s wishes for his daughter’s future. 

Special considerations under LIC Premium Waiver Benefit Rider

1. The premium paid towards the LIC Premium Waiver Benefit is eligible for a tax benefit under Section 80C of the Income Tax Act, 1961.
2. The benefit received under this rider would be as per the tax norms of the base plan.
3. However, there would be no tax implications for the premiums waived “off” by the LIC of India.

Termination of LIC Premium Waiver Benefit Rider:

LIC Premium Waiver Benefit Rider will be terminated in the following conditions:

1. The death of the insured individual
2. The rider is returned in the free look period
3. The policy reaches the date of expiry
4. The base policy reaches its expiry date/ turns into a paid-up policy
5. With the cancellation/ surrender of the base policy/ rider

Typical conditions in LIC Premium Waiver Benefit Rider

1. There is no Sum Assured rebate available with the LIC Premium Waiver Benefit Rider
2. The LIC PWB Rider does not acquire any paid-up value
3. Policy loans may be available with the base policy but not under the rider
4. The LIC PWB Rider doe not offer any surrender value
5. There is a 15 – 30 day free look period with the policy, so in case the policyholder is not satisfied, he can return the policy 

Before you opt for the LIC Premium Waiver Benefit Rider

Visit Turtlemint and going through the details of the rider, will help you to understand how opting for LIC Premium Waiver Benefit Rider influences the premium as well as the payout. 

Conclusion

In case of an unforeseen exigency that can cause a major or even complete loss in the income of the family, Premium Waiver Benefit in LIC acts like a boon. If the insured individual, who was paying the premiums, suffers death or disability, LIC would waive off the due payments. Neither the policy nor the benefits lapse, even when the payment of premiums is stopped.