Payor benefit rider
Also known as: payor rider, payor provision
A payor benefit rider is a life insurance rider, typically on a juvenile policy, that waives premiums if the adult paying for the policy dies or becomes totally disabled before the insured child reaches a specified age.
A payor benefit rider protects a life insurance policy when the person paying the premiums — the payor — is not the insured. It is most often attached to a juvenile life policy, where a parent or guardian pays premiums on a policy insuring a child's life. If the payor dies or becomes totally disabled, the insurer waives the premiums, keeping the policy in force at no cost.
The waiver is not permanent. Premiums are typically waived until the insured child reaches a specified age — commonly 21 or 25 — at which point the now-adult insured takes over payments. For example, if a parent paying on a policy insuring their 8-year-old dies, the rider keeps the policy fully in force for the next decade or more, with cash value continuing to grow, until the child reaches the age stated in the rider.
The rider is essentially a waiver-of-premium provision applied to a third-party payor rather than the insured. Because it adds a real benefit, it carries a small additional premium, and the payor usually must provide evidence of insurability, since the insurer is now taking on risk tied to the payor's life and health as well as the insured's.
Policy riders are a dependable topic on state life insurance and life & health licensing exams. Expect a question describing a parent paying on a child's policy who dies or becomes disabled — the payor benefit rider is the provision that keeps the coverage going without premiums.
Key takeaways
- The payor benefit rider waives premiums if the person paying for the policy dies or becomes totally disabled.
- It is most common on juvenile life insurance policies paid for by a parent or guardian.
- Premiums are waived until the insured child reaches a stated age, often 21 or 25.
- It functions like a waiver-of-premium rider, but is triggered by the payor's death or disability rather than the insured's.
- Life insurance licensing exams test the rider through parent-and-child policy scenarios.