What is waiver of premium?
Waiver of premium is an optional add-on to a life insurance, critical illness, or income protection policy. If you become unable to work due to illness or injury for a specified period (typically 6 months), your insurer waives your premiums — keeping your policy active at no cost to you until you recover or the policy ends.
How does waiver of premium work?
- You add waiver of premium to your policy (usually costs a small additional monthly amount)
- You become unable to work due to illness or injury
- After a deferred period (typically 6 months), your insurer starts waiving your premiums
- Your policy remains fully in force at no cost while you're unable to work
- When you return to work, you resume paying premiums as normal
Is waiver of premium worth adding?
It depends on your circumstances. Waiver of premium is most valuable if:
- You don't have income protection (and might cancel your life insurance if you couldn't afford premiums)
- Your life insurance premium is a significant monthly cost you would struggle to maintain without income
- You have no employer sick pay or other income safety net
If you already have comprehensive income protection, waiver of premium adds limited value — your IP benefit would cover your life insurance premium as part of your income replacement anyway.
Waiver of premium vs income protection
These are not substitutes for each other. Income protection replaces your full income (up to 70%) if you can't work — covering rent/mortgage, bills, food, and all other costs. Waiver of premium only covers the insurance premium itself. They serve different purposes.
Frequently Asked Questions
No — waiver of premium only pays your insurance premium if you can't work. Income protection replaces up to 70% of your income. They are very different products serving different purposes.
Typically 5–15% of your base life insurance premium. On a £20/month life insurance policy, waiver of premium might add £1–£3/month.