The guaranteed insurability rider is one of the most fundamental riders. It is one that everyone should get. As with any contract, you must also read the fine print. The name sounds very powerful and without a doubt this rider carries a lot of weight, but it does have its limitations. The basic function the guaranteed insurability rider lies in its name. Once you purchase a policy with this rider, you are insurable for life. The great perk is that your insurability is preserved with the previous health rating.
What Exactly Does the Rider Guarantee?
Besides the health rating, it can also define a date or event until which the guarantee is valid. For example, if you’re taking out a term policy, this rider will preserve your health rating for its duration. So, when it’s time to renew, meaning you’re much older, you’ll be able to take out your new policy with the health rating of the prior one. Another specification this rider will define is a cap of the guarantee. You cannot expect to take out a $100,000 policy, you can’t expect this rider to guarantee your health rating for another $1,000,000. The limit is usually equally to or less than the face value of the policy it is attached to.
Price of Guaranteed Insurability Rider
This is where you must get into the fine print. Often the rider comes at price, but some companies offer this rider as a free add on. The price, if any, is hard to specify ahead of time. When you get your illustration, it will also indicate the price of the rider. However, the price in the illustration is only an estimate. Just like the policy premium. The final price is set after your life policy application is processed by an underwriter. But prices of riders in general won’t beak your bank.
When to Opt In to The Rider
This rider comes in useful especially when you plan to get extra insurance in the future. If you decide to get an extra policy or death benefit in the future, having this rider will save you big money. Your original health risk is preserved and you can bypass the underwriting process. Even if you do not loose your insurability in the future due to some serious illness, you are older. And as you know, the older you get, the more expensive life insurance becomes, regardless of your health.