Guaranteed Insurability (LTC)
An option to buy additional daily benefits at stated dates without underwriting, maintaining coverage against rising care costs.
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Practice This Concept
An insured owns a whole life policy with a rider that provides term insurance coverage on the insured's spouse and each child until the children reach a specified age. This attachment is known as a:
Family term rider — A family term rider adds level term insurance on the insured's spouse and eligible children to the insured's base permanent policy, with the children's coverage typically ending at a stated age. It is an economical way to cover family members under one policy, and the spouse's term coverage may be convertible. This is distinct from a payor rider (which waives premiums on a juvenile policy if the payor dies or becomes disabled), a guaranteed insurability rider (which allows buying additional coverage without evidence of insurability), and a cost of living rider (which adjusts the death benefit for inflation).
National insurance concept
A young professional buys a disability income policy with a future purchase option rider. What does this rider allow?
The insured to buy additional disability coverage at specified future dates or life events without evidence of insurability — A future purchase option rider, also called a guaranteed insurability option, permits the insured to purchase additional disability income coverage at stated intervals or upon specified events, such as a birthday milestone, marriage, the birth of a child, or an income increase, without having to prove insurability again. This protects an insured who develops a health condition after the policy is issued, because the insurer must offer the additional coverage at standard rates despite the new condition. The rider addresses the fact that disability needs tend to grow as income grows.
National insurance concept
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