Guaranteed Insurability Rider
What is a guaranteed insurability rider?
The guaranteed insurability rider is something that can be added to a life insurance policy. Life most riders, it generally must be added to the policy when it is first purchased by the owner. Life most all life insurance riders, there will be an additional premium charged for the benefit of adding this rider to the policy.
This rider is usually offered to a young applicant. If purchased, the guaranteed insurability rider will allow the owner of the policy to purchase additional coverage in the future without any underwriting.
What is true about the guaranteed insurability rider or option?
As with all riders, the guaranteed insurability rider is optional. However, if the applicant selects to add this rider to their policy, it will state the owner of the policy will have certain option dates in the future, which are usually spread out every three to five years on the anniversary date of the original purchase of the policy, on which the owner can purchase additional coverage without underwriting. That’s right, no physical, or underwriting questions whatsoever!
Of course, if the owner of the policy does elect one of the option dates, they will have another premium to pay for the new policy, and although the premium will not be based upon their current health, it will be based on their attained age, which is the age they are on the date they elect the option.
What does the guaranteed insurability rider or option allow?
It’s pretty simple really, as already mentioned, it allows the owner of the policy to buy more coverage without going through underwriting. Additionally, though, this rider will usually also allow the owner to purchase more coverage if certain life events occur, such as birth/adoption of a child, or marriage. In this case, the guaranteed insurability rider will only provide the policy owner so many days to elect the option, such as 30-90 days from the occurrence of the life event.
What if the owner of the policy skips an option date under the guaranteed insurability rider?
If the owner elects not to purchase additional insurance on a specified option date, they lose that date, and can only elect to purchase additional life insurance on one of the future remaining dates.
Keep in mind it is also true that generally, the owner of the policy will only be able to purchase an additional amount of life insurance up to the dollar amount provided in their original policy, and no more.
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