What is Guaranteed Insurability Rider?
Guaranteed Insurability Rider-In a simple explanation, is an additional insurance coverage to your existing insurance policy.
It is a non-compulsory insurance element in life and health insurance that gives you the right to purchase additional insurance without undergoing the long process you went through at your initial purchase.
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How Does a Guaranteed Insurability Rider Work?
Guaranteed Insurability Rider Works in a way that when you apply for life insurance, you’ll likely be required to answer a series of health questions. You may also have to undergo a medical examinations.
The insurers usually give you the opportunity to add a rider should incase you want to boost your coverage at a later date. For example, you may be asked if you’d like to include one or more riders?. As a policyholder, it’s solely your choice to include or remove a rider in your policy. In summery, guaranteed insurability rider allows you to purchase additional coverage.
These series of questions which the insurance company would ask you are all dependent on the amount of the death benefit you need in your life insurance. Your age, health, and the amount of coverage, all play a role in the insurance company rates. Age has a big influence in insurance premiums-The higher you age, the higher your insurance premium.
So in the future if you find that you need more coverage, you can always apply for additional coverage later. But what if by then your health has significantly changed? Which you know that, people generally don’t get healthier as they age. So If you wait to apply for additional coverage in the future, the insurance rating may increase and not be as favorable as it were when you initially purchased the policy and you could end up paying higher premiums.
What you Need before you buy Guaranteed Insurability Rider
To buy a guaranteed insurability rider, you need a permanent life insurance policy, such as whole life insurance. A permanent life insurance policy covers your entire life, as long as the premiums are paid.
Unlike term life insurance, which only promises to pay out a benefit if you die during the term. So Knowing how a guaranteed insurability rider works can help you decide if you need to purchase one for your own life insurance needs.
What you Need to Know about Guaranteed Insurability Rider
- Guaranteed insurability rider attracts an additional premium to your policy.
- With the guaranteed insurability rider in place, you will have a limited number of times or age to increase your insurance coverage. For example, you can still increase your insurance at ages 25, 30, and 35 or sometimes at 40 years. After which, you may no longer increase your death benefit without taking another medical examinations.
- You may also have the right to increase your death benefit within a certain time period as agreed by your insurance company following life-changing events like: Marriages, Birth of a child or Adoption of a child.
- You cannot use the guaranteed insurability rider to increase your benefit at any other time. Instead, you must wait for one of the option periods stated in your policy.
- If you choose not to increase your benefit during the period provided by your insurance company will not affect your ability to increase it during subsequent option periods.
The amount to which you will increase your benefits will only come from your insurers. For instance, if you purchase a $50,000 policy, you may likely be able to increase the guaranteed insurability rider benefit to as high as $50,000. So after adding your guaranteed insurability rider, your death benefit would be $100,000.
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Do I Need a Guaranteed Insurability Rider?
Guaranteed Insurability Rider is beneficial to anyone younger than 40 who has reason to believe they will face health challenges in the future. If you have chronic illness or health problems that runs in your family, purchasing a permanent life insurance policy with a guaranteed insurability rider can ensure you have the benefit you need while you maintain your low premiums.
Insurance rider is a package that can be used to expand your policy’s coverage. A guaranteed insurability rider, allows you to increase your policy’s death benefit without being subject to a second medical exam. Adding rider could make sense if you think your life insurance needs may change in the future, though it could also mean paying higher premiums.
Advantage of guaranteed insurability rider
- A guaranteed insurability rider allows you to increase the death benefit of your life insurance policy at specific intervals without taking a new medical exam or answering additional questions.
- Insurers only allow benefit increases at specific times, known as option periods, which typically end around age 40—but option periods may also include major life events, such as marriage or the birth or adoption of a child.
- The amount by which you can increase your death benefit with a guaranteed insurability rider is generally equal to the amount of the original policy.
Disadvantages of Guaranteed Insurability Rider
- You will pay an additional money on top of the insurance premium. Which you should have just purchased a higher-value life insurance policy from the beginning.
- The age limit of increment is 40, meaning you will have to purchase a rider in your 20s or 30s.
- Life insurance is relatively cheap for most people in their 20s and 30s, and it increases as you age. So rider will keep increasing as you age. It will not help you avoid expensive age-related premium increases.
- Guaranteed insurability riders are generally meant for permanent life insurance policies, which are more expensive than term life insurance policies.
- You can only benefit from rider if you purchase it at a young age. At an old age, permanent insurance premiums with riders are very expensive to afford.
Types of Guaranteed Insurability Rider
- Cost-of-living rider: A cost-of-living rider allows you to purchase additional insurance each year. The amount of insurance you can purchase is relatively determined by how much the cost-of-living index has increased. The rates for insurance purchased as cost-of-living rider is low, and you do not have to show proof of insurability.
- Term rider: With this rider, you can add term coverage on top of a permanent life insurance policy to cover your additional insurance needs for a short period of time.
- General guaranteed insurability rider: is an optional benefit included with some life insurance policies. This rider guarantees you the option to buy additional life insurance at given age periods without requiring proof of insurability. With General guaranteed insurability rider, if you want to increase the death benefit that will be paid to your beneficiary when you die, you won’t need to take another medical exam or answer additional questions.
- life insurance riders: Standard life insurance policies are designed to pay an agreed death benefit to one or more individuals you choose as your beneficiaries. Life insurance riders allow you to increase your insurance policy’s coverage. Life insurance riders also helps you customize your policy to fit your unique needs. You can add multiple riders to the same policy, which will allow you to create the coverage that works best for you. Life insurance riders are optional, you can choose to add it to your life insurance policy. Remember, while adding riders, you can increase your premiums. But the good news is that riders offers more protection than a policy would by itself.
In summery, a guaranteed insurability rider can be used to increase your life insurance coverage without a second medical exam. However, it will add extra cost to your policy. It may not be necessary if you already have sufficient insurance.
What Is an Accidental Death Benefit Rider?
An accidental death benefit rider is a non-compulsory feature you can add to a term life or whole life insurance policy in order to grant your loved ones access to a death benefit if you die in a covered accident. That means that if you pass away unexpectedly from a covered accident, your family will still be protected financially.
Accidental Death Benefit Rider is totally different from a standard accidental death benefit policy. In the traditional accident insurance policy, your beneficiaries are only compensated with little cash, while in an accidental death benefits rider, your beneficiaries are granted access to a large sum of cash. You can add an accidental death rider to your current life insurance coverage, helping you customize it to fit your unique needs.
Accidental death rider, may sometimes cover major non-fatal injuries that prevent you from working. But this depends on the rider, however. Your life insurance agent can help you understand what the accidental death rider covers, so you can make the right choice for you and your beneficiaries.
How Do Accidental Death Benefit Riders Work?
Accidental death benefit riders offers your beneficiaries an extra payout on top of your regular life insurance policy in the event of death. This extra payment can sometimes double the amount of money your family receives in your regular life insurance policy. This is what makes Accidental Death Benefit Riders better than the regular life insurance coverage. Once the insurance company confirms that your death meets the requirements of the rider, your loved ones will receive the payment.
Disadvantage of Accidental Death Benefit Riders
Accidental death benefit rider adds extra coverage to your policy, so buying one will likely increase your premiums, or payments. But then, the good thing about Accidental Death Benefit Riders is that adding that protection can save your family from dealing with major expected expenses when you are no more.
Is an accidental death benefit rider a good fit for me?
Who need Accidental Death Benefit Riders ?
Accidental Death Benefit Riders might be a good fit for you if you:
- If you work a place that are prone to accident. You should talk to an agent about adding accidental death benefit rider to your policy.
- If you are always on the road, you travel a lot weather for work or pleasure. You should consider adding accidental Death Benefit rider to your policy. Because, it’s always good to make sure you’re covered.
- Accident is something that does not ring bell, so it can happen anytime – an accidental death benefit rider can help you protect your family with confidence, so that you won’t have to worry about uncertainty.
What does an accidental death benefit rider cover?
Here are types of accidents that may be covered under Accidental death benefit riders:
- Car or traffic accidents
- Airplane crashes
- Workplace incidents
- Fire-related injuries
- Firearm accidents
- Getting drowned in the sea during mining
Sometimes Accidental death benefit riders may include major injuries or trauma, in that case, you may also be covered for limb loss; loss of hearing, eyesight, or speech; or partial or permanent paralysis.
What an accidental death benefit rider does not cover
- Accidental death benefit riders does not cover illnesses, which your regular insurance policy can cover.
- Accidental death benefit riders will not also cover you if your injury or death is related to suicide.
- Your are not covered if your accident happened while you were under the influence of drugs or alcohol.
- You also might not be covered if you have pleasure in skydiving or mountain climbing.
- If you work in a high-risk job like law enforcement, firefighting, or the military, accidental death benefit does not cover you.