What Is a Guaranteed Purchase Option Rider?
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.
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