What is meant by 'premium waiver' in an insurance policy?

In an insurance policy context, a 'premium waiver' refers to a provision that allows the insured to suspend making premium payments if they are receiving benefits, typically due to a disability or critical illness. This mechanism ensures that the policy remains in force despite the insured's inability to make payments, effectively providing financial relief during difficult times.

This benefit is crucial for policyholders who might face financial strain due to their current circumstances. By waiving the requirement to pay premiums, insurers can help maintain coverage without adding additional stress or financial burden on the insured. This is particularly beneficial since many insurance policies are contingent on the payment of premiums; if they lapse, the insured could lose their coverage.

The other options do not accurately define 'premium waiver.' Additional premium payments and penalties for late payments are unrelated to the concept of waiving premiums. Similarly, providing a benefit for early termination of the policy does not align with the idea of suspending obligations due to receiving benefits under the policy.