Life takes a lot of twists and turns—at different points, you might find yourself with a new job, a growing family, or other significant changes. While you can’t predict the future, you can take steps to protect it by purchasing a life insurance policy that creates a vital financial safety net for your loved ones.
Despite any changes or challenges you may currently face, it’s possible to secure coverage with the flexibility to adjust it later, without the hassle of medical exams or providing your entire health history. A guaranteed insurability rider (GIR) is an optional feature that allows you to adapt your coverage to life’s twists and turns, ensuring your loved ones stay protected.
How Does a Guaranteed Insurability Rider Work?
An insurance rider lets you add more coverage to your existing policy. A GIR is a simple way to increase your life insurance coverage at specific times in the future without having to go through medical exams again. When you reach one of the option dates and have the opportunity to update your coverage, you can increase your death benefit to a predetermined maximum amount, often equal to your original death benefit.
That said, your policy may also have an age limit, at which point you may need to undergo the underwriting process again (including a medical exam) if you want to increase your coverage further. Ask your provider about its specific rules.
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What Are Option Dates?
A GIR typically gives you a few opportunities to increase your coverage, known as option dates. These are triggered for different reasons and at certain milestones in a person’s life. Your insurance policy outlines your option dates, potential age restrictions, and allowed life events. Review those documents to understand the rider’s terms.
Major Life Events
Certain life changes may lead you to want to increase your coverage. These changes may include getting married, growing your family, or buying a home.
Specific Ages
Your policy will outline the ages you can change coverage, usually every few years. For example, you may be able to add coverage when you turn 25, 30, 35, etc.
Here’s a hypothetical example: Say you buy a life insurance policy at 33 with a $250,000 death benefit and a GIR that offers the option to increase your coverage every five years until you’re 40 or after a specified life event. If, for example, you get married at 35, you can decide to increase your coverage by another $100,000 to protect your spouse as your beneficiary without any medical checks.
What Life Insurance Policies Allow GIRs?
Guaranteed insurability riders are commonly available on permanent life insurance policies, which cover the rest of your life, as opposed to term policies. Permanent policies are designed for long-term coverage, making them better suited for a rider that allows adjustments over time.
Whole life insurance policies typically allow GIRs. These policies offer lifelong coverage and a cash value component that can grow over time. GIRs can also be added to universal life insurance policies, which provide flexibility in premium payments and death benefit amounts.
It’s uncommon for an insurer to offer a GIR on a term policy, but you can check with your carrier or insurance agent for details.
Pros and Cons of Guaranteed Insurability Riders
Like any type of life insurance, GIRs have advantages and potential drawbacks.
Pros
- You can adjust your coverage to meet changing needs without worrying about future health concerns.
- A GIR provides financial security even if your health takes a turn or you become uninsurable.
- Because your rates are locked in when you first purchase a policy, future coverage increases may be less expensive than buying a new policy later.
Cons
- You’ll pay an additional premium for this rider, even if you don’t use it.
- Each option date usually has a cap on how much you can increase coverage.
- You may end up with more coverage than you need if you frequently increase your death benefit.
- GIRs are most common on more expensive permanent life policies.
Is a GIR Right for Your Needs?
The decision to add this rider to your life insurance coverage is personal. It comes down to weighing the benefits of future flexibility and peace of mind about potential health concerns against the cost.
This rider might not suit everyone’s needs, but it can be a valuable addition to your life insurance policy if you fall into one of the following categories:
Young and Healthy
If you’re young and healthy now, a GIR lets you lock in lower premiums, which can be beneficial later.
Growing Family
Your life insurance needs may increase as your family grows, so a GIR allows you to boost coverage.
Major Life Changes
If you anticipate big changes like changing jobs, growing a family, or starting a business, you can adjust your coverage to better meet your current (and future) needs.
Health Challenges
If you have a family history of certain health conditions, a GIR can protect your family without needing a medical exam.
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