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What is a Guaranteed Insurability Rider?

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A guaranteed insurability rider lets the policyholder buy additional coverage for their policy at a later date with no further underwriting.

Commonly shortened to GIO rider (for guaranteed insurability option), this popular feature enables you to tailor your coverage to your individual needs and preferences as your life changes over the years.

There are numerous benefits to this rider, but also a few reasons this rider might not be the best idea for you.

We take a detailed look at this popular life insurance option below, starting with a more thorough discussion of what the guaranteed insurability rider is all about.

What is Important to Understand About Guaranteed Insurability Riders?

The biggest perk of a guaranteed insurability rider is that this life insurance feature allows the policyholder to add additional death benefits to their policy down the road—without any additional underwriting.

Depending on the specific life insurance contract you signed, your GIO rider might be included for free with your coverage. Other companies require a small additional payment for the rider to be added onto your policy.

Though each rider is different, depending upon the company issuing it, the differences boil down to small nuances. 

These tend to include the coverage period, as well as when purchases of additional coverage can be made.

But, the ability to make this increase in coverage is guaranteed.

You won’t be required to provide any proof regarding changes in your health or lifestyle when you add coverage.

This is particularly beneficial if you develop a serious medical condition during the term of your coverage. It enables you to add an additional death benefit to your policy without jumping through the normal hoops.

Normally, a life insurance company would be unlikely to offer coverage to a patient with a serious medical condition. It’s just too risky for them.

A guaranteed insurability rider guarantees you’ll be able to up your coverage despite your change in medical condition, no matter what.

Of course, this puts a slight amount of risk on the company.

But, because they’ve gone through the underwriting process for your original policy, this risk is relatively small.

The risk is also the reason some companies charge a small additional fee for GIO riders.

What Else Do You Need to Know About GIO Riders?

Most guaranteed insurability riders are available on the policy, at the time of application only. They can be exercised:

  • At certain ages
  • When getting married
  • When having a new child

Note, you’ll be limited on how much you can increase your coverage amount with the GIO rider. The limits mostly have to do with the health rate class you were assigned during the initial underwriting process.

For this reason, it’s especially valuable for young adults buying life insurance for the very first time.

The maximum increase amount tends to be about twice your original death benefit.

Some life insurance providers also put a cap at $125,000 of coverage.

Many people decide to pair the GIO rider with a waiver of premium rider, which goes into play if you become disabled.

This waiver actually covers your premiums for you if you’re unable to work. And, thanks to the GIO rider, you would also be able to increase your death benefit without cost.

In this way, these two riders combined are extremely powerful if a person were to become sick or injured and unable to work.

If interested in this combined coverage, you should definitely consider buying both a guaranteed insurability rider and a waiver of premium rider upfront with your normal life insurance coverage.

How Does a Guaranteed Insurability Rider Really Work?

Buy the GIO rider and you’ll have the ability to increase your death benefit coverage throughout the term of your policy.

Here’s a quick example:

Janet’s mom bought a life insurance policy on her when she was 18 and heading off to college. It was a simple $50,000 whole life insurance policy, with the guaranteed insurability rider. Janet was approved at a Preferred rate.

When Janet was 24, she was diagnosed with a rare form of cancer. However, after more than a year of battling, she overcame it and was able to ring the cancer bell.

When she turned 25, it came time for her to utilize her GIO rider.

Even though she had a very rare form of cancer and would have otherwise been denied life insurance from all other carriers, her current insurer let her add an additional $25,000 in coverage, and charged her the Preferred price.

The amount you add at your policy’s set dates are flexible, though there are upper and lower limits. You don’t have to add the maximum amount. In fact, you don’t have to add any amount at all.

But, keep in mind that once you reach a predetermined age (most often in your 40’s), you can no longer use the guaranteed insurability rider, or your insurer will set a limit on how many times you can use the rider, in total.

You should also remember there is a cap on increases. The exact value of this cap varies from provider to provider.

What Does The GIO Rider Cost You (Roughly)?

One of the most eye-catching characteristics of the guaranteed insurability rider is that increases are priced at your normal health rating.

This means the company is unable to perform additional underwriting on you at the time that you increase your benefit. They are forced to offer you coverage exactly as you originally purchased it, except now you’re a few years older!

Even if you don’t have a medical condition, this is important.

Many people gain weight as they age or develop minor health problems, for example. Your GIO rider covers these by keeping you in the same health class you were placed in when you initially bought coverage.

Adding a guaranteed insurability rider usually does come with a cost, though, even if you don’t use it in future years.

It often increases the overall yearly rate you pay for your insurance policy, although some life insurance companies now include the rider for free with their initial policy.

Though you might pay slightly more for your annual life insurance with the GIO rider, it will be nowhere near the increase you’d have to cover if you went out and bought a new life insurance policy.

What are the Benefits of a GIO Rider?

The benefits of selecting the GIO rider option are hard to understate, and they’re pretty straightforward.

The rider simply allows you to add an additional death benefit without additional underwriting.

This makes a guaranteed insurability rider one of the cheapest ways to increase the value of your coverage without switching policies.

The biggest benefit of the GIO rider is how it’s adapted for your changing needs. A person’s life, when they first buy life insurance, is often much different than ten or twenty years down the line.

The GIO rider allows you to make policy changes based on new relationships, marriages, mortgages, the birth of children, children’s education, retirement, and more.

Out of all these benefits, coverage with the birth of a child is perhaps the most popular. People buy the GIO rider because it allows them to increase their coverage if they have children down the line.

How Do You Find a Guaranteed Insurability Rider?

Most life insurance companies now offer a guaranteed insurability option for their life insurance policies.

The availability of this additional feature is thanks to the high demand for it among those buying life insurance, especially those of a younger age.

With that said, the rider differs slightly from provider to provider.

That’s why it’s still so important to do your research into each company to make sure the policy, and the additional features they offer, adequately meet your needs.

Author:

Jason Fisher

Jason Fisher is the founder and CEO of BestLifeRates.org, LLC. and a multi-state licensed life insurance agent who has helped over a million Americans seek out affordable coverage, compare quotes, or get their family and businesses covered.

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