Extended Insurance; Premium Waivers

Cash value life insurance, but not term insurance, provides that if a premium is not paid within the specified time limit, the coverage may not be terminated. Instead, the insurance generally continues as term insurance for a limited period, which can sometimes run for several years, depending on the amount of the policy's accumulated cash value.

The waiver of a premium rider provides that the insurance company will not collect premiums for a period of time during which the insured is disabled. When you are comparing the prices of policies issued by different insurance companies, keep this in mind: with some policies the rider is automatic, with the cost being built into the annual premium. With others, it is an optional feature, the cost of which may vary depending on age, sex, the terms of the waiver, and the particular insurance company. Although most insurance agents seem to swear by the waiver of premium coverage, if you must pay extra for it, ask yourself if you have adequate disability income coverage. If you do, maybe the waiver of premium coverage is something that can safely be passed up.