Guaranteed Insurability Rider
A guaranteed insurability rider allows the policyholder to purchase additional life insurance at specified future dates or events without providing evidence of insurability (no medical exam required), regardless of changes in health.
Exam Tip
Guaranteed insurability = buy MORE coverage later WITHOUT health exam. Valuable if health may decline. Usually ends around age 40-45.
What is a Guaranteed Insurability Rider?
A guaranteed insurability rider (GIR), also called a guaranteed purchase option, allows policyholders to buy additional life insurance coverage at predetermined times without proof of insurability. This is valuable because you can increase coverage even if your health has declined.
Key Features
| Feature | Description |
|---|---|
| No Medical Exam | Health not evaluated |
| Guaranteed | Cannot be denied |
| Fixed Dates | Specific option dates |
| Limited Amounts | Maximum purchase amounts |
When Options Can Be Exercised
| Trigger | Example |
|---|---|
| Age-Based | Every 3 years until age 40 |
| Life Events | Marriage, child birth, home purchase |
| Option Dates | Policy anniversary dates |
Typical Limits
| Limit Type | Common Amount |
|---|---|
| Per Option | $10,000 - $50,000 |
| Total | Equal to original face amount |
| Age Limit | Options end at age 40-45 |
Benefits of GIR
| Benefit | Description |
|---|---|
| Future Protection | Coverage despite health changes |
| Cost Certainty | Premium based on current age |
| Flexibility | Exercise some or all options |
| No Underwriting | Automatic approval |
Common Life Events Triggering Options
- Marriage
- Birth or adoption of child
- Home purchase
- Significant salary increase
- Divorce (coverage on children)
GIR vs. Future Increase Option
| Feature | GIR (Life) | FIO (Disability) |
|---|---|---|
| Policy Type | Life insurance | Disability insurance |
| Trigger | Specific dates/events | Income increases |
| Amount | Fixed maximum | Percentage of income |
Cost of the Rider
| Factor | Impact |
|---|---|
| Age | Younger = lower cost |
| Amount | Larger options = higher cost |
| Frequency | More options = higher cost |
| Typical Cost | 2-5% of base premium |
Exercising Options
| Step | Action |
|---|---|
| 1 | Notify insurer within option window |
| 2 | Complete application (no health questions) |
| 3 | Pay additional premium |
| 4 | New coverage added to policy |
Study This Term In
Related Terms
Rider (Insurance)
InsuranceA rider is an optional add-on to an insurance policy that provides additional benefits or modifies coverage for an extra premium, allowing policyholders to customize their protection beyond the base policy.
Underwriting
InsuranceUnderwriting is the process by which an insurance company evaluates risk and determines whether to accept an application for coverage and at what premium rate.
Conversion Privilege
InsuranceThe conversion privilege is a policy provision allowing the policyholder to convert a term life insurance policy to a permanent life insurance policy without providing evidence of insurability (no medical exam required).