insurance

Waiver (Insurance)

A waiver in insurance is a voluntary relinquishment of a known right or an agreement by the insurer to give up certain policy conditions or requirements. It can also refer to additional coverage that waives premium payments under specific circumstances, such as disability.

Example

“When Mark became permanently disabled, the waiver of premium rider on his life insurance policy activated, allowing him to maintain his coverage without paying monthly premiums.”

Memory Tip

Think 'WAIVE = Willingly Abandoning, Insurance Voids Expectation' - giving up a right or requirement.

Why It Matters

Waivers can provide valuable protection during financial hardship, such as keeping life insurance active when you can't afford premiums due to disability. Understanding waivers also protects you legally, as insurance companies may waive their right to deny claims if they don't enforce policy conditions consistently, and knowing when waivers apply can save you significant money.

Common Misconception

Many people think waivers are automatic or that insurance companies will always point out when they're waiving requirements, but waivers are often specific legal situations that require documentation. Some also believe that once something is waived, it's waived permanently, when many waivers are situational or temporary.

In Practice

Lisa has a $250,000 life insurance policy costing $75 monthly with a waiver of premium rider that cost an extra $8 monthly. When she becomes disabled at age 45, the insurance company waives her premium payments while maintaining her full $250,000 coverage. Over the next 20 years until retirement, this saves her $18,000 in premiums ($75 × 12 months × 20 years) while keeping her family protected. The $8 monthly rider cost ($1,920 over 20 years) provided $18,000 in value - a 9:1 return on her investment.

Etymology

From Anglo-French 'weyver,' meaning to abandon or forsake, the term evolved to mean voluntarily giving up a legal right or claim.

Common Misspellings

waiver insurencewaver insurancewaivr insurancewaiver insuranse

Related Terms

Waiver of Premium endorsement Rider

More in insurance

Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…