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What Is a Guaranteed Purchase Option Rider?
What is a guaranteed purchase option rider? It’s an option your life insurance policy contains that lets you buy additional coverage without taking another medical exam. It’s most common for children’s policies, allowing them to expand their coverage as an adult. Let’s go over why you might want this option for your child, and how it can set them up for big savings later in life.
What Is a Rider?
Riders are add-ons that expand your policy’s coverage.
They have to be selected and/or purchased at the time you buy your policy. Most carriers will not let you add them later.
It’s important to know what’s available and what you want as you’re shopping for a policy. Some riders are free, while others will add to the cost of your policy. And not all carriers offer every available rider on every policy.
Here are some of the few most popular riders available:
- Guaranteed purchase option. As we’ll go over below, this rider lets you buy more coverage later, without the need for additional medical underwriting.
- Return of premium. If you have a term life policy that expires, the return of premium rider gives you your money back at expiration, with a small amount of interest.
- Child rider. This rider adds coverage for all your current and future children, up to a certain age (late teens or early 20s, depending on the insurer).
- Critical or chronic illness. If you are diagnosed with a critical or chronic illness, this rider lets you tap into the death benefit to help pay for your treatment and care.
If you know you want a particular rider, it’s important to work with an agent who can get you a quote for the policy you want with the riders you need. That’s exactly what we’re here for! Call us at (800) 521-7873 and let us help you customize your policy with a guaranteed purchase option rider. Or click the button below to get started with a free term life quote!
What Is a Guaranteed Purchase Option Rider?
A guaranteed purchase option (GPO) gives you the right to buy more coverage later, with no underwriting required. The underwriting process is what lets insurers set the price for your coverage. Life insurance is individually priced, so the underwriting process involves evaluating factors specific to you, including your age, lifestyle, job, and health.
For many people, health is the most important of these factors. The free medical exam you take – often required when you buy a policy – gives the insurer a clear picture of your current health. During the exam, which is paid for by the insurer, a mobile medic will come to your home or office and measure your height and weight, as well as take blood and urine samples. This medical information helps the insurer evaluate how big a risk it would be to cover you, which is how they set the price of your policy.
A guaranteed purchase option rider means you can buy more coverage later without the need for any further underwriting. With this rider, it won’t matter whether you’re sick or healthy or whether you have a job that’s considered dangerous and hard to insure. You’ll be allowed to either top up your coverage as needed, or buy an entirely new policy with no new medical exam.
This rider is helpful if:
- You know you’ll need more coverage later in life, when you start or expand your family.
- You can’t afford as much coverage as you want now, but feel you’ll be able to afford it later.
- You’re in good health now, but are worried about your ability to buy more coverage later if you develop health problems. If you have a family history of high-risk conditions like heart disease, high blood pressure, or cancer, it may be a good idea to lock in the right to buy more coverage now, while you’re healthy.
Rather talk to a real person about your coverage? That’s what we’re here for! Call us at (800) 521-7873 and let us answer all your questions. Or click the button below to get started with a free term life quote!
Considerations
If you’re looking up “What is a guaranteed purchase option rider,” you need to know that not all GPOs are the same. Every carrier has its own policies, rules, and riders, so the answers to the questions below will vary with each policy you’re looking at.
- Is the rider only available on a child’s policy? Some companies only offer a GPO rider on a child’s policy, so the child can buy extra coverage as an adult.
- How much does the rider allow you to buy? The rider will specify how much coverage you’re allowed to add. It may impose a dollar-value limit (up to $100,000, for example), or specify a multiplier (10 times your present coverage, for example).
- Is there a time limit on the rider? Some riders may limit the amount of time you have to buy more coverage. This is most common in children’s policies, which may require them to use the rider by age 21.
- Are there triggering events required to purchase more coverage? The rider may allow that extra coverage purchase only when certain life events occur, such as marriage, buying a home, having a child, or at certain ages or dates (every few years, usually).
In most cases, your insurer will contact you when there’s a window for buying more coverage. At that point, it will be up to you to decide whether to exercise that option at that particular time.
Rather talk to a real person about your rider options? That’s what we’re here for! Call us at (800) 521-7873 and let us answer all your questions. Or click the button below to get started with a free term life quote!
