What Is a Guaranteed Insurability Option and Why Do You Need One?

When you’re young, life insurance is probably the last thing you think you need. Life insurance isn’t (and never has been) an easy topic to talk about. Let’s face it – no one wants to think about death. Or we think about it too late, when insurance may not be attainable (and definitely less affordable).

That’s why it’s important to get life insurance when you’re young. You’re most likely healthier, so a life policy is more affordable. (Learn more in this list of 6 reasons millennials should consider life insurance.)

It’s also the perfect time to add a Guaranteed Insurability Option (GIO) rider.

I recently talked about life insurance with my ERIE life insurance agent, Tony Cusati of Sitter Insurance Agency in Erie, Pennsylvania, after buying a starter home and getting married.

Agent Q&A:

To help me protect my belongings – and the people I love – Tony helped me get a life insurance policy with a GIO rider.

We had a valuable and insightful conversation. Here, Tony answers my questions about why life insurance is so important when you’re young and why you should consider a Guaranteed Insurability Option rider.

First off, why do you need life insurance?

Life insurance helps you be proactive instead of reactive. I’ve seen it firsthand. My dad passed away in his 40’s when he was really young. It was unexpected. He didn’t have a life insurance policy in place and my mom really struggled without him. Having lived through this makes it even more important for me to talk about life insurance with all of my customers.

If this is your first time considering life insurance, read these eight tips.

A lot of young people don’t have life insurance. Why do you think that is?

There’s such a gap in generations when it comes to seeing the value and importance of life insurance. According to Forbes, only 10% of millennials say they have enough life insurance in place to cover their needs. Millennials don’t see the importance of getting it now, when they’re healthy, instead of later, when their health is likely to decline. Or they have the misconception that it’s very expensive – which isn’t true.

To start the conversation, I often ask:

It can be easier to consider when they have debts to pay or a family depending on them. If a young person has never experienced death firsthand, it can be tough. They’ve never dealt with a family member or high school friend passing, so they’ve probably never had to think about it. They’re still putting their family at risk, though, even if they’re delaying life milestones like purchasing a home or starting a family.

For a young person, I take budgets into consideration. A permanent life policy might not make sense right away, so I would suggest a term policy instead because it’s more affordable. You might pay money now that might never pay out; but it’s your safety net for you and your family, regardless of who you’re protecting.

Learn more about the difference between term life insurance and whole life insurance.

Who needs a Guaranteed Insurability Option rider, and why?

You have no idea what’s going to happen to you three years from now, five years from now or ten years from now.

If someone calls me after getting a terminal or serious diagnosis, it’s unfortunately already too late to help them get life insurance. If you get a life policy with a Guaranteed Insurability Option rider when you’re young, you’ll already have it in place should you develop a condition like heart disease or cancer down the line.

How does a Guaranteed Insurability Option rider work?

When you get the rider, you create the ability to protect yourself throughout your life and you have it for as long as your policy is in place. We just talked about how, generally speaking, you get better rates when you’re young and healthy, so you’re assigned a better risk class when your policy goes through underwriting. With GIO, that great risk class stays with you, even if your health deteriorates.

Once you’re approved by underwriting, the rider is a bound contract—the only way you can lose it is if your policy terminates. There are a few limitations: you only have the ability to add to your coverage through your GIO rider up to age 46, and you can’t exceed the million-dollar coverage max (not including your initial insurance policy). Your local ERIE agent can help explain coverage details, terms and limitations so you can understand how the GIO coverage works.

What does this actually look like for Alex? Since Alex was in great health when she got her policy at age 25, she qualified for our best risk class – Ultra Select. Adding the GIO rider locks Alex into that risk class as long as her policy is in force. So anytime Alex exercises her GIO and adds coverage to her life insurance policies, she still gets coverage at the best rate since she was already locked in at Ultra Select.

This is a huge win because a GIO rider would allow Alex to purchase additional coverage under her policy with her total coverage not to exceed the one million dollars maximum.

How can someone increase their life insurance coverage if they need more protection?

You can increase your life insurance coverage easily when qualifying life events occur if you have the GIO rider. Those life events are getting married, buying a home and having a child. The way it works is that it allows you to purchase additional life insurance through another policy, without having to go back through underwriting.

You have the opportunity to increase your death benefit because of your GIO rider at certain ages, starting at age 25 and going up to age 46 (basically every three years). The most coverage you can add at each point is $250,000.1

This is how I set up Alex’s life policies. She already had a 30-year term policy in place for two years before getting married and buying a house. When she called me and asked about how to increase her coverage amount so her husband wouldn’t lose their home if something happened to her, we set up a second 30-year term policy with a GIO rider.

When I told Alex the total insurance premiums she would pay each month for over $200,000 worth of coverage between both of her policies, she laughed. It really can be that affordable.

Life insurance can be a hard topic to talk about, for both agents and their customers. What advice do you have for broaching the subject?

We all know we will pass; we just don’t know when. It’s hard; it really is. But rip that bandage off for a few hours to talk with your insurance agent, and then you’ll have that peace of mind.

Imagine being on the other side of the table, as the agent. It’s a tough topic to talk about. If you can be sincere, maybe poke a little humor in there and share some real-life stories, you can break down that wall long enough to make sure your customer is covered.

When it comes to surprise health diagnoses, you never think it will be you. Alex unexpectedly received a serious health diagnosis in 2021, and it made me really glad that Alex got life insurance when we did.

Protect Yourself Now for the Future

Talking about life insurance is not an easy conversation to have, but it’s absolutely one worth having. Life insurance is proactive protection, for both you and your family—and it’s easier to get when you’re young.

To learn more about the life insurance policies available to you—including the Guaranteed Insurability Option rider—talk to your local ERIE agent.

Alex Witkowski is a marketing communications consultant in ERIE’s marketing department.

ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.