What does a waiver of premium rider allow the policyholder to do?

A waiver of premium rider is a crucial feature in life insurance policies that provides financial relief to policyholders who find themselves unable to work due to a disability. This rider allows the policyholder to skip premium payments during the period of disability, ensuring that their coverage remains in force without the financial burden of making those premium payments. This benefit is especially important for individuals who may have reduced income or no income at all due to their disability; it safeguards their financial security and maintains their life insurance protection during challenging times.

The other choices do not accurately describe the purpose of a waiver of premium rider. For instance, increasing the benefit amount typically requires an additional rider or endorsement, not simply a waiver of premium. Cancelling the policy at no cost relates more to surrender provisions rather than waiving payments during disability. Lastly, transferring the policy to another person involves different legal and contractual processes not covered by a waiver of premium rider. Thus, the primary and correct function of a waiver of premium rider is specifically to allow policyholders to defer their premium payments while protecting their insurance coverage in the event of a disability.