Which of the following statements is true about the guaranteed insurability rider?
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As we go through life our needs change. A guaranteed insurability rider can be added to a life insurance policy that gives you the option to increase the policy’s death benefit to cover your changing needs. These can be applied at a specific time (3 or 5 years) or upon a specific life event (marriage, children, new mortgage). Content Editorial Manager 8 min read September 27th, 2022 We don’t know where life will take us. We may suddenly need more life insurance coverage due to events such as marriage or having another child. In a few years, we might face new health conditions or lifestyle changes that work adversely against our insurability. To partially solve this issue, a guaranteed insurability rider (GI rider) allows individuals to expand their prior life insurance coverage without worrying about their future health or lifestyle conditions. In this article, we explain GI riders and insurance riders more generally. This post also describes how GI riders work, how much they cost, and who should consider them. Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below. What are insurance policy riders?Life insurance riders are an optional add-on to enhance your policy’s coverage. If your life insurance policy were a burrito, a rider would be the option to add guacamole! The variety of riders available allow you to customize your policy to further fit your bespoke needs. The rider availability and costs depend on your insurer, the rider details, your health, and more. Some riders include:
What is a guaranteed insurability option rider?A guaranteed insurability rider allows you to increase your policy’s death benefit up to a pre-determined amount, without another medical examination. At set times throughout your policy’s life, you have the option to add this additional coverage up to the pre-determined amount. This rider is excellent for those that need a policy that can accommodate future changes that they may not be able to predict. Although providing a medical examination to an underwriter might not be a lot of work, your premiums could skyrocket if the test discovers new health issues. If you suspect you may face future health problems through means like genetic testing or due to a history of family health issues or lifestyle choices, a GI rider might be useful to add to your life insurance policy. It’s also beneficial if you currently have a limited budget, but want to ensure that you’ll have the option for purchasing additional coverage later on, as your budgeting flexibility improves over time. Some insurers may offer this rider on term and permanent life insurance, but it’s most common for permanent life policies. How does a guaranteed insurability rider work?The typical GI rider works by allowing the insured individual the option to purchase additional coverage periodically in the future, without providing new evidence of insurability (i.e. a new application or exam). The standard timeline to exercise the rider would be 5 years from the effective date of the original policy. Many policies will also allow exercising the option to purchase additional coverage upon certain life events such as the purchase of a new house, or marriage or birth/adoption of a child. Generally, you must exercise the option within a pre-defined period upon any of these life events. More choice. Lower price. PolicyAdvisor saves you time and money when comparing Canada’s top life insurance companies. Check it out! GET STARTED When can you buy a guaranteed insurability (GI) rider?The availability of a guaranteed insurability rider depends on your insurer. But, the decision of whether to add it is generally decided upon when you apply for your life insurance policy. The addition of the GI rider is approved at the stage of the underwriting process. At this stage, the insurer can view the additional financial risks of providing you with a GI rider and approve the proposed costs. The guaranteed insurability rider cannot be added after the initial policy contract is issued, so it’s important to review its need at the time of the policy application. For example, if during the medical exam, the underwriter discovers that you have had cancer or other condition that commonly resurfaces after years of remission, increasing your death benefit may be financially risky to the insurance company, as the likelihood that they would have to pay out the larger death benefit would be high. Your insurer may let you add a GI rider after this point, but it depends on their procedures. How often can you use a guaranteed insurability rider?There are usually two ways to apply the guaranteed insurability option — at a set number of years or upon predetermined life milestones. These are also referred to as option dates. Your option dates may arrive every three to five years. Or, your policy may allow you to have your option dates coincide with events such as marriage, having a child, or other significant life events. Increasing your death benefit at life milestones may be beneficial to accommodate such significant changes as your needs may change during these times. Perhaps before one of these events, such as buying a house, you had fewer liabilities, but after you want to make sure they are covered upon your death. GI riders can help cover your increasing life insurance needs. To calculate your insurance needs right now, try out our life insurance calculator. This calculator takes factors such as your current liabilities (debts, mortgages, credits) and determines the amount of death benefit coverage you need for full protection. Check out PolicyAdvisor's life insurance calculator. How much does a guaranteed insurability rider cost?The guaranteed insurability rider is a relatively inexpensive rider to add to your policy. But some insurers may add a guaranteed insurability rider option for free. Even when there’s a charge, it’s usually inexpensive — a few extra dollars a month depending on your insurer. Guaranteed Insurability Rider OptionsIf you are looking to have $100,000 coverage added to your death benefit in the future, the guaranteed insurability rider cost varies depending on age and gender. Keep in mind that your premiums may also increase at the time you actually exercise this rider—the following prices are for the rider only, not the increase in coverage.
After the initial cost of adding the option of a GI, there is another cost associated with the actual exercising of the GI option when it’s available (such as the pre-determined 3 or 5 years or upon a significant life event). Your insurer ultimately increases your annual premium to accommodate the extra death benefit they will be providing. The overall monthly premium will increase to reflect the higher death benefit being made available for you. The calculation of the increase is based on the age at which you have exercised the GI option. The later you exercise the option, the higher the price of the exercise. Who needs a guaranteed insurability rider?A GI rider benefits you if you have prior medical conditions or family health histories that may worsen your circumstances later. If you are concerned about health issues or lifestyle choices in the future but need additional coverage, the rider lets you obtain the additional coverage without another medical examination. So, you can protect your loved ones with adequate life insurance but without a significantly higher premium, that may be associated with adverse health or lifestyle circumstances. A GI rider is also beneficial where you want
Riders provide numerous ways to customize your life insurance policies. A GI rider, specifically, can help you expand your coverage in the future without an additional medical examination. PolicyAdvisor’s licensed insurance experts can help you learn more about the life insurance and rider options available to you. Book some time with us and see how you can customize a life insurance plan for you and your family’s needs. Need help? Call us at 1-888-601-9980 or book time with our licensed experts. SCHEDULE A CALL The information above is intended for informational purposes only and is based on PolicyAdvisor’s own views, which are subject to change without notice. This content is not intended and should not be construed to constitute financial or legal advice. PolicyAdvisor accepts no responsibility for the outcome of people choosing to act on the information contained on this website. PolicyAdvisor makes every effort to include updated, accurate information. The above content may not include all terms, conditions, limitations, exclusions, termination, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail. All rights reserved. If something in this article needs to be corrected, updated, or removed, let us know. Email . KEY TAKEAWAYS
By Kaitlyn Kokoska Content Editorial Manager What is true regarding the guaranteed insurability rider?A guaranteed insurability rider gives you the option to increase your existing death benefit without undergoing medical testing or re-qualification.
What is a guaranteed insurability policy?Guaranteed Insurability — an optional feature in life and health insurance that guarantees the insured the right to purchase additional insurance without undergoing a medical examination or otherwise providing evidence of good health.
What is the purpose of the guaranteed insurability rider in a disability income policy?The Guaranteed Insurability Rider gives the insured the option to increase their base policy monthly benefit by purchasing additional amounts of insurance. Additional amounts will have the same benefit period and elimination period as the policy.
Which of the following statements is true regarding the waiver of premium rider?Answer C is correct. If the insured policyowner were to become totally disabled, the Waiver of Premium Rider would waive future premiums for the duration of the disability and still allow the cash value and dividends to continue as though the premiums were being paid.
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