What is a Guaranteed Insurability Rider

What Is a Guaranteed Insurability Rider?

A guaranteed insurability rider is something you add to your life insurance policy that lets you extend your coverage at a later point without having to go through the underwriting process again. 

Most life insurance policies begin with a medical screening and paperwork to help the insurance underwriters determine your appropriate premiums and coverage. If you want more coverage at a later date, you would need to repeat this process to get a new policy—unless you have a GIO rider on your policy. With the guaranteed insurability rider, you are guaranteed the opportunity to expand your coverage regardless of your current health during the specified time window(s). The guaranteed insurability rider allows you to expand your coverage without additional medical screening. 

How Does a Guaranteed Insurability Rider Work?

A guaranteed insurability rider can be used for both term and whole life insurance policies. You’ll set it up with your insurance provider when you take out a policy. Depending on your GIO there will be specific time periods you’re allowed to expand your coverage, and specific amounts you will be able to grow by. Whatever option you choose, you will pay the additional premiums for the determined period of time.

Term insurance with a GIO is less beneficial because you’re only getting coverage for a certain period of time anyway. If you don’t know that you’re going to need to expand your coverage, you could end up paying more for a policy that you won’t necessarily benefit from. On the other hand, with whole life insurance, you are at least benefiting from the cash value of the policy—even if you never use the GIO. 

When including a GIO on your policy, it’s important to know the timing and coverage limits that come with it. We know a guaranteed insurability rider provides you with a specific timeframe and a certain amount to expand your life insurance coverage. Those specific timeframes and amounts will vary based on your insurance company and policy. These dates may be arranged around the anniversary date of your policy, your birthday, or other specific calendar dates. They can also be tied to life events such as your wedding date or the birth of a child. The time windows where you are able to expand coverage are usually about 3-5 years apart. The coverage expansion varies based on your insurance provider and your needs. In most cases, the minimum amount you can increase is $10,000 and the maximum is $125,000.

Despite the ability to expand your coverage, GIOs are rather limiting in many regards. The designated expansion dates are rigid and force you to try to predict your future. These dates can easily be missed, or occur at less than ideal times. This means you may pay for the GIO without ever using it. For many, pairing their whole life insurance with a convertible term policy allows for more flexibility in future conversion. This way you can expand the convertible term policy to a second whole life policy whenever you want as long as the term policy is still active.

Who Needs a Guaranteed Insurability Rider?

With all of the complications from guaranteed insurability riders, who could benefit from using one? What does a guaranteed insurability rider provide? In general, people who have no other way to expand their life insurance coverage otherwise could benefit from a GIO. A guaranteed insurability rider can be beneficial under these circumstances: 

  • If you develop a chronic illness after starting your original policy
  • If you have a family history of serious illness
  • If you want to ensure the death benefit of your policy can grow slightly over time to meet the needs of your beneficiaries. 

The guaranteed insurability rider was created for people who want to ensure their beneficiaries are taken care of as their circumstances continue to change and know that they want to increase their insurance coverage periodically. 

For example, if you contract a chronic illness that worsens over time, you wouldn’t necessarily be able to expand your coverage later without a drastic cost increase. A GIO would help you increase your coverage without having to do another medical screening that could increase your premiums drastically. 

Is a Guaranteed Insurability Rider Worth It?

If you are considering a guaranteed insurability rider, you might ask yourself if the GIO feature is worth the extra cost? 

For most people, the answer is no. A GIO limits your options for coverage expansions and there is usually a better option available.

Consider the limitations of a guaranteed insurability rider. To increase your coverage, you have to do it within the allotted times, and you only have so much that you can increase coverage. Many people find these limits restraining, especially if they aren’t able to increase their coverage exactly during the specified GIO time windows. GIOs are missing a key factor that’s important to a good life insurance policy: flexibility. A good life insurance strategy gives you more options, without limiting when you can expand your coverage. 

Your situation will determine the value you get from your policy. If you have a family history of illness, work in a dangerous occupation, or just want the guaranteed ability to expand your coverage slightly throughout your life, then a GIO may be exactly what you are looking for. 

An Alternative to Guaranteed Insurability Riders

Instead of a GIO, many people will purchase a whole life policy as well as a convertible term policy. The convertible term policy essentially acts as your GIO. It can become additional whole life insurance at any point without the limitations a GIO carries. Whenever you need additional coverage, simply convert your term policy into whole-life coverage in 100,000 increments. You’ll have more total coverage overall starting out, and more flexibility on when to convert the term portion to permanent coverage at a later date.

The Bottom Line

Overall, a GIO rider provides you the option to expand your coverage by specific amounts at predefined points in the future without having to go through the underwriting process. But for most people a convertible term policy paired with a whole life policy offers more flexibility to meet unique and changing financial needs than the GIO rider provides.

Check out our Life Insurance 101 for more information. Then, when you’re ready, schedule a strategy session with us to discuss your options. We’ll help you find the coverage that you need.

Get a Free
Life Insurance Quote

Happy Insured Family

Get My Quote »



Quick Start Guide
Getting Started and
Getting Results with the
Perpetual Wealth Code™

Quick Start Guide