LIC Premium Waiver Benefit Rider Calculator

LIC Premium Waiver Benefit Rider Calculator

What this calculator does

LIC's Premium Waiver Benefit Rider (PWB) is an optional add-on attached to an eligible base policy - commonly a child/education plan taken out on a minor's life, where the rider actually covers the proposer (the parent paying the premiums), not the child. If the proposer dies or suffers total and permanent disability while the rider is in force, LIC waives all remaining future premiums of the base policy for the rest of the Rider Term, and the base policy continues exactly as if those premiums had been paid - the child (or other life assured) still receives the full sum assured, bonuses, and maturity benefit on schedule, without the family having to keep paying.

Because the benefit only pays out once (it either triggers, waiving everything left, or it never triggers), the amount actually at risk shrinks every year the rider stays in force - if the proposer dies in the rider's final year, only one more year of premium gets waived; if they die in year one, the entire remaining term of premiums gets waived. This calculator gives you an indicative estimate of:

• the rider premium for your Age at Entry, Annual Base Policy Premium, Rider Term, and payment mode
• the total rider premium payable over the full Rider Term
• the maximum premiums waived if the trigger event happens as early as policy year 1
• a full year-by-year waiver schedule showing exactly how much base policy premium would be waived if the trigger event occurred in each specific policy year

Formula Used

Eligibility. Entry age must be between 18 and 55 years, the Rider Term between 5 and 30 years, and cover must end by age 65:

$$EntryAge + RiderTerm \le 65$$

The Annual Base Policy Premium must be between ₹3,000 and ₹3,00,000.

Waiver Sum Assured (reducing). If the trigger event happens in policy year k (1-indexed), the premiums from year k through the end of the Rider Term T are waived - so the amount waived reduces by one annual premium every year:

$$WaiverIfYear(k) = AnnualBasePremium \times (T - k + 1)$$

The maximum possible waiver (event in year 1) and the average waiver amount over the whole term (used to price the rider, since the cover shrinks linearly to zero) are:

$$MaxWaiver = AnnualBasePremium \times T$$ $$AverageWaiver = \frac{AnnualBasePremium \times (T + 1)}{2}$$

Rider premium. The rate per ₹1,000 of Average Waiver amount loads with age, since the risk being insured (death/disability of the premium payer) behaves like ordinary mortality risk rather than a flat accident rate:

$$RatePerMille = 1.25 + 0.04 \times (EntryAge - 18)$$ $$AnnualRiderPremium = \frac{AverageWaiver}{1000} \times RatePerMille$$

The annual premium is split by payment mode using LIC's standard modal factors (yearly 1.00, half-yearly 0.510, quarterly 0.260, monthly 0.0875):

$$InstallmentPremium = AnnualRiderPremium \times ModeFactor$$ $$TotalRiderPremium = InstallmentPremium \times InstallmentsPerYear \times T$$

Note: this rate, the eligibility limits, and the pricing approach are illustrative approximations for planning purposes, not LIC's official IRDAI-approved rate table or policy document, which is subject to full medical and financial underwriting of the proposer. Always confirm exact figures and eligibility with LIC or an authorized agent before attaching this rider.

How to Use

1. Enter the Age at Entry of the proposer (the person the rider covers) in years (18 to 55).
2. Enter the base policy's Annual Base Policy Premium in ₹ (3,000 to 3,00,000).
3. Enter the Rider Term - usually the remaining Premium Paying Term of the base policy - in years (5 to 30, subject to cover ending by age 65).
4. Choose your Premium Payment Mode.
5. Click Calculate to see your rider premium, total premium payable, the maximum possible waiver amount, and the full year-by-year waiver schedule.

Worked Example

Suppose a 32-year-old proposer is paying an Annual Base Policy Premium of ₹40,000 on a child plan with 15 years left in its Premium Paying Term, and pays yearly.

$$RatePerMille = 1.25 + 0.04 \times (32 - 18) = 1.25 + 0.56 = 1.81$$ $$AverageWaiver = \frac{40{,}000 \times (15 + 1)}{2} = \frac{40{,}000 \times 16}{2} = 3{,}20{,}000$$ $$AnnualRiderPremium = \frac{3{,}20{,}000}{1000} \times 1.81 = 320 \times 1.81 = ₹579.20 \text{ per year}$$

Over 15 years that's a total rider premium of roughly 579 \times 15 \approx ₹8{,}680. If the proposer were to pass away in policy year 1, the full remaining 40{,}000 \times 15 = ₹6{,}00{,}000 of future premiums would be waived; if instead it happened in year 10, only the remaining 40{,}000 \times 6 = ₹2{,}40{,}000 would be waived - the child's policy continues either way, with no further premiums due from the family.