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You can add a guaranteed insurability rider to a life or disability insurance policy. The rider ensures that you will be able to buy larger amounts of insurance in the future as your need for coverage increases. Your health outlook may the deciding factor whether to include and pay for the rider on a new policy.
For individual policies, both life insurance and disability insurance are medically underwritten products. To buy coverage you must be in good enough health to meet the requirements set by the insurance company. If the state of your health declines or you fall prey to a serious illness, you may no longer be able to buy more insurance to increase your coverage. A guaranteed insurability rider gives you the right to add more insurance in the future even if the state of your health would make you uninsurable.
The rider allows you to purchase an additional amount of insurance at periodic dates in the future. The typical insurability rider lets you purchase insurance every three or five years on the anniversary date of your original policy. Generally, you must exercise the right within 30 or 90 days of the specified date. The last date you can exercise the rider usually occurs during the year you turn 40. The cost of any added insurance you chose to buy would be the company's standard rate based on your age when you exercise your purchase rights under the rider.
The guaranteed insurance rider allows you to buy a smaller amount of insurance when you are younger and just starting out with a job or family, and gives you the assurance that you can increase your coverage as your needs for insurance increase. This rider could be especially attractive if you have a family history of illness that would, if you came down with the same medical condition, make it difficult or impossible for you to buy more insurance.
Individual life insurance companies may call a guaranteed insurance rider by different names. Guaranteed insurability rider is probably the most common name. Other names for the rider include guaranteed purchase option and future increase option rider. If you are a young individual considering your first life or disability insurance policy, have the agent go over the details of the rider offered by the specific insurance company.
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