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What is a Payor Benefit Provision?

What Is a Payor Benefit Provision?

A payor benefit provision is a provision under which premiums are waived in the event the policyholder becomes disabled or dies.1 The payor benefit provision is also known as a juvenile premium provision, and is usually found in juvenile insurance policies where the insured is the child of the policyholder, and under 18 years of age.2 This provision is designed to protect the child from paying premiums on the insurance policy should the policyholder become disabled or die, and is typically added to an insurance policy as a rider for an increase in price.3
 
 

How Does a Payor Benefit Provision Work?

As mentioned, a payor benefit provision is designed to protect the child of the policyholder in the event the policyholder becomes disabled, dies, or is no longer able to pay for policy premiums. Typically, the provision applies until the child has reached a certain age where they would be expected to pay the premiums alone.3

However, in most cases payor benefit provisions do expire after a certain point, and have a number of other limitations.3 For this reason, it’s of utmost importance to read the policy in detail before deciding if the payor benefit provision you have chosen is the correct fit.
 
A payor benefit provision may be included as a rider or as a clause to a life insurance policy, and may appear under a different name, such as a “juvenile premium provision,” but ultimately acts the same regardless of how it is applied.3 

The payor benefit provision is also known as a juvenile premium provision, and is usually found in juvenile insurance policies where the insured is the child of the policyholder, and under 18 years of age.

Should you decide a payor benefit provision is a necessary feature of a life insurance policy, it is highly recommended you speak to a licensed insurance agent or financial advisor before purchase.
 
  1. IRMI.com, Payor Benefit, 2020
  2. BusinessDictionary.com, Payor Benefit, 2020
  3. Investopedia, Waiver of Premium for Payer Benefit, 2019