How Does the Waiver of Premium Clause Work in Disability Insurance?

Many individual and group disability insurance policies contain Waiver of Premium provisions that allow for the waiver of the annual premiums while you are disabled. However, if your claim is pending and under review, you should continue to make all premium payments which become due until the long-term disability insurance carrier informs you that your claim has been approved and you no longer need to continue making premium payments. Once your disability claim has been approved, the disability carrier will reimburse you the amount of any premiums paid after your date of disability.

If you fail to make the premium payment and the disability carrier determines that you are not disabled then your policy will lapse, and the disability carrier will likely refuse to once again insure you since you are now a high a risk individual due to your reported medical condition, despite the fact that the disability carrier does not find you to be disabled. Insurance companies seek to insure low risk individuals that are unlikely to file disability claims, as opposed to high risk individuals with existing medical conditions. You may still pursue your existing disability claim; however, you will need for the insurance company or a court of law to overturn the denial of benefits in order for the disability policy to once again become effective.