What is a guaranteed insurability rider?


The guaranteed insurability rider allows you to increase your life insurance coverage during specified periods without going through underwriting again.

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When you buy a life insurance policy, your life insurance company may offer you additions to your policy called riders. Riders allow you to customize or add to your coverage.

A guaranteed insurability rider, sometimes known as a guaranteed purchase option rider, gives you the ability to increase your policy’s death benefit without going through a new medical screening, netting you more affordable pricing.

The guaranteed insurability rider comes at a low additional cost, but it isn't offered for every life insurance policy. It’s most commonly seen in whole life insurance. Because of the high premiums of whole life. Guaranteed insurability is only useful if you or your child have a medical condition or family health history that could worsen and significantly impact insurance premiums with age.

Key Takeaways

  • This type of rider is most common in permanent life insurance policies, such as whole life insurance.

  • The rider allows you to increase your life insurance benefit on a recurring basis or due to a life event without a new medical exam.

  • Guaranteed insurability is useful if you have an illness that could worsen over time and cause an increase in premiums.

  • Most people will spend less by buying term life insurance, even if you eventually need a higher death benefit.

How guaranteed insurability riders work

Since the guaranteed insurability rider lets you buy additional life insurance based on the information from your original underwriting report, your premiums will go up based on your coverage increase, but not due to any health or lifestyle changes. Each time you’re eligible to increase your coverage you are limited to a minimum and maximum increase, which varies by provider but is commonly $25,000-125,000. Some insurers might set a maximum of double your current death benefit amount instead.

When you can purchase new coverage (the option date) also varies by insurer, but it is typically every three or five years from the day your policy went in force and within 30-90 days of a major life event, such as a marriage.

The cost of adding a guaranteed insurability rider varies by insurer, but can be as low as $3-5 per month.

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Who needs a guaranteed insurability rider?

If you’re relatively healthy and don’t have a chronic illness or a family history of serious health issues that could complicate your approval for term life insurance, you probably don’t need a guaranteed insurability rider.

Even if your parents bought a whole life policy for you as a child, “a relatively healthy adult will be able to buy a term policy that's lower in cost and likely be able to purchase a much larger amount of life insurance for the same premiums they’d be paying for whole life policy,” says Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Financial Planner.

However, you may benefit from a guaranteed insurability rider if you:

  • Have a medical condition that may worsen significantly as you age

  • Have a family history of serious illness that could affect you before age 45

  • Want a permanent policy and plan to increase your coverage in the future

In any of these scenarios, the rider could save you money should your health become much worse than it was during the initial underwriting process. If you have a child with a chronic illness or similar lifelong concern, you may also consider buying them a policy with a guaranteed insurability rider to lock them into more preferential premiums while they’re younger and comparatively healthier.

Note that children without health concerns will save more money in adulthood with term life insurance assuming they become relatively healthy adults. And you can’t increase your coverage with the guaranteed insurability rider after reaching a certain age, commonly around 45 years old.

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Using the ladder strategy instead

If your principal concern is saving on your life insurance in the long term, the ladder strategy is a financial technique in which you overlap multiple term policies with varying coverage lengths and death benefit amounts. Each policy expires at a different time, so you have higher coverage during years you’re most likely to have debts and dependents and lower coverage as you age and your financial obligations decrease.

If you buy these policies when you’re young and healthy, your premiums for the policies that expire last will be lower than if you bought them at an older age, saving you money overall. Because this technique is complex, consult with a financial adviser and life insurance broker to find out if it makes sense for you.

A guaranteed insurability rider is a useful customization for life insurance policies, but if neither you nor your dependents have long-term health concerns, you probably don’t need one. For most people, the high premiums of permanent life insurance mean that buying a term policy is still the most affordable option, even if you do need to increase your coverage eventually.

Frequently asked questions

What does a guaranteed insurability rider do?

Guaranteed insurability riders allow you to add more coverage to your life insurance policy without undergoing a new medical exam or other underwriting.

When can I buy more coverage with a guaranteed insurability rider?

It depends on your rider and your insurance company, but most riders allow you to increase your coverage every three or five years starting from the first day of your policy or 30-90 days before a life event like a marriage or childbirth.

Who should get a guaranteed insurability rider?

If you or your child have a health condition that will worsen as you or your child ages, then a guaranteed insurability rider could be a good option for you. Most relatively healthy adults will save money and be able to get higher coverage amounts by buying term life insurance instead.

How much does a guaranteed insurability rider cost?

The price varies by insurance company, but typically the rider can be added to your policy for $3-5 per month.