Guaranteed Insurability Rider

Guaranteed Insurability Rider: When in the market for life insurance, you might be asked if you’d like to add on 1 or more additions to your life insurance policy (optional coverage).

Most insurance companies will allow you to customize your policy by adding on life insurance riders that give you some peace of mind and additional coverage.

Guaranteed Insurability Rider

The Guaranteed Insurability Rider is just one of many kinds of riders. What kind of riders can you add to your life insurance policy? Some common ones include:

  • Disability Income Rider This rider will pay out after you’ve been found to be completely disabled and cannot work.
  • Term Conversion Rider – This allows you to change term life insurance into permanent insurance without having a medical exam.
  • Accelerated Death Benefit Rider Also known a Critical Illness Rider, this rider pays out after you’ve been diagnosed with any clearly defined illness such as cancer, kidney failure, heart attack, etc.
  • Guaranteed Insurability Rider – This allows a person to attain higher amounts of insurance should their coverage needs change (they get older, their household circumstances change, or there is a change in your lifestyle).

A Look At The Guaranteed Insurability Rider

This rider is particularly useful because life changes so suddenly. You may suffer a disability or become diagnosed with an illness that could raise your life insurance rates or make it to where you’re no longer insurable down the road.

The guaranteed insurability rider (GI rider) is a rider added to a life insurance policy that lets you purchase more life insurance without going through the underwriting process again. It’s an added benefit to the policy that may either be free or come with a small fee.

The GI rider is useful to an insured because it allows them to increase their policy’s death benefit without providing proof of insurability.  Insurability means a lack of risk to the life insurance company to offer you a policy, ensuring you have life insurance coverage.

For example, a person with a terminal illness like cancer is unlikely to be insured by the company with a new policy in the near future. This is because the payout for the death benefit will likely be made before the insurance company can recoup its costs over time.

However, with the GI rider, you can have more extra added to your policy without needing to prove your insurability. Since this is a risk to the company, you may be charged a slighter higher premium.

How Does a Guaranteed Insurability Rider Work?

The GI rider lets an insurance policyholder adjust the death benefit coverage to their policy at certain times of their life.

best life insurance ridersThe amount added is limited to a particular amount. The coverage doesn’t have to be added at the option date, and they can add an amount that’s less than the total amount available.

The option to add more coverage with a GI rider will take place at certain points of a person life= – usually at certain ages such as 30, 35 and 40. Of course, the opportunity to change your policy may end around 40 years old. Still, your life insurance company may also offer you a chance to change your policy during special events in your life – birth of a child, marriage, etc.

Be sure to talk to your life insurance company to determine what these cut off ages are or what special events are covered. There is typically a cap on how much coverage is permitted to be added or a cap on the number of events to boost the coverage.

What Makes The Guaranteed Insurability Rider So Great?

Applying for and underwriting an insurance policy means going through a stringent process. There are a plethora of diseases that could disqualify someone from getting coverage including but not limited to:

  • Cancer
  • Diabetes
  • Heart disease

However, a guaranteed insurability rider means the insured can increase their coverage regardless of their current health. It allows them to ask for more life insurance coverage to ensure their beneficiaries are taken care of after their death – even getting the maximum amount if they so choose.

This rider is useful to anyone who may be classified as high-risk because of an illness.

Priced at Your Previous Health Rating

The great thing about the GI rider is that any extra coverage you ask for is billed at the life insurance contract’s initial health rating. When people get older, they normally experience weight gain, health problems or not as active as they once were. When you need to apply for a new life insurance policy, you are charged for your current health state.

This can lead to higher premiums!

Even when the insured asks for extra coverage on their policy, the life insurance company can request a higher premium than they previously had because of their current health state (if it has worsened).

However, a guaranteed insurability rider keeps the premium in check even if a person’s state of health has declined from the initial write up of the policy.  This means you save in your yearly premium when you look at a new policy with similar benefits.

You can also add more coverage, which doesn’t always happen if you are no longer deemed insurable for a new life insurance policy.

What’s The Cost Of A Guaranteed Insurability Rider?

This rider shouldn’t break the bank if you’re looking to include it in your life insurance policy.  The cost will vary from company to company, but usually costs a few dollars extra each month. However, once your life insurance contract has been issued, you are not allowed to add the GI rider in later.

Therefore, if you want it, you need to get it before the life insurance contract is written.  

The guaranteed insurability rider is typically only permitted for permanent types of life insurance such as whole life and universal life insurance. Speak with your agent to see if the you can add the rider to a term life insurance policy before you buy.

The guaranteed-issue life insurance rider is a whole other way to address your future and the potential inability to get insured. It provides you with an individual policy that comes with no health questions and offers your loved ones’ protection if you were to pass away.

Bottom Line

Please contact us for your free life insurance needs.We’d be happy to run customized quotes and answer all of your questions. We work with dozens of the best rated life insurance companies in order to find the ones that will offer you the lowest rate. Life Insurance Blog is independent which simply means we work for you and not any particular company. You’ll receive top notch service from licensed independent agents.

Call us at 888-411-1329. We look forward to helping you!

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Michael Quinn

Michael Quinn is the owner of Life Insurance Blog. If you have specific questions or face challenges getting coverage. Please email or call me a call at 888-411-1329 - Either way, I'm happy to help you.

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