A Guaranteed insurability rider, or GI rider as it is also known, is a term used to describe any additional insurance benefit on a policy without requiring an underwriter's approval. Essentially, a rider is an extra benefit for a policy other than the death benefit only. For example, this might include a rider to cover the policy holder for accidental injuries incurred in a car accident, medical payments coverage, or even protection for loss of life savings in the event that the policyholder dies prematurely.
It's important to understand how this rider works before deciding whether to get one. There are two primary ways to approach the decision to get a guaranteed insurability rider. The first, and most common, way is to get a standard rider without an underwriter. This strategy works well for policies that only have a small amount of coverage, such as term life, renewable term, or whole life policies.
However, a rider can provide more benefits than just additional coverage. In fact, the benefits that a rider can provide will almost always exceed the value of the additional coverage, if it has any value at all. There are a few types of guaranteed insurability riders. Here's a quick rundown of some of the more popular types:
Guaranteed Adjustable Rate Rider (GAAR): The purpose of this rider is to allow policyholders to increase premiums annually on a plan even when the underlying financial security isn't as strong as it once was. For instance, a homeowner may be paying a fixed rate on their mortgage and have a relatively safe income. But they're buying a policy with a higher premium, which means that the policyholder will experience an increase in his or her premium payments every year. A Guaranteed Adjustable Rate Rider (GAAR) is used to help policyholders keep premium payments low. If the insured plans on changing from the fixed-rate plan to an adjustable-rate plan, the Guaranteed Adjustable Rate Rider will allow the insured to do so.
Guaranteed Annuity Rider (GAR): A Guaranteed Annuity Rider is a type of guaranteed insurability rider that protects policyholders from certain financial catastrophes. This can mean that the rider will cover policyholders' funeral expenses should they pass away within a specific time frame after purchasing the insurance. The time frame can be anywhere from several years to a few decades depending on the rider. Also, it can protect against the financial losses that could result if the insured dies before the policyholder had his or her initial deductible. reached the point where their policy would have expired.
As you can see, there are a variety of ways that info on a Guaranteed Insurability Rider can make life and death easier for policyholders. So when thinking about getting one, take a look at the coverage options that you currently have and what additional benefits you might want added to the policy to ensure you get the best protection for the most money. Discover more about this topic here: https://www.britannica.com/topic/life-insurance.