When you apply for life insurance, you'll likely be required to answer a series of health questions. Depending on the amount of the death benefit, you may also have to undergo a medical exam. Your age, health, and the amount of coverage all play a role in how a life insurance company rates your overall insurability. But what happens if in the future you find that you need more coverage? Sure, you can always apply for additional coverage later, but what if by then your health has significantly changed? Unfortunately, people generally don't get healthier as they age. If you wait to apply for additional coverage in the future, your rating may not be as favorable and you could very well end up paying higher premiums.
The guaranteed insurability rider
The guaranteed insurability (GI) rider is available on certain life insurance policies and allows you to purchase additional insurance at specific dates in the future (subject to minimums and maximums) without having to go through an exam or answer health questions. In other words, you can buy more life insurance without having to prove your insurability. As with all life insurance policy riders it comes with an additional cost. However, the benefits can outweigh the extra expense. (It's important to note that the guaranteed insurability rider is different from a guaranteed issue life insurance policy that is intended for seriously ill people and comes with a very high premium.)
The typical GI rider works by allowing you the option of purchasing additional coverage every three or five years on the anniversary date of your original policy. Many policies will also allow you to exercise your option due to certain life events, such as a marriage or birth/adoption of a child. Generally, you must exercise the right within 30 or 90 days of the specified date, so it's important to review your policy and know your option dates.
The GI rider can be a worthwhile to have included in your life insurance quote if you think your health may change significantly in the future, or if you have a family history of medical issues. It's also beneficial if you have a limited budget, but want to ensure that you'll have the option for purchasing additional coverage later on.