South Carolina Life Insurance Practice Exam

Which rider allows the policyholder to increase their coverage amount regardless of health status?

1. Waiver of Premium Rider

2. Guaranteed Insurability Rider

3. Cost of Living Rider

4. Child Rider

The correct answer is: Guaranteed Insurability Rider

The Guaranteed Insurability Rider allows the policyholder to increase their coverage amount without having to provide evidence of insurability, which means they can do so regardless of any changes in health status. This rider is particularly beneficial for individuals who may develop health issues over time, as it ensures that they can secure additional coverage without facing the risk of being declined due to medical conditions. This rider typically specifies certain ages or life events, such as marriage or the birth of a child, when the policyholder can exercise the option to increase coverage. This added flexibility can provide peace of mind, knowing that they can adjust their life insurance to better meet their needs as circumstances change. The other options do serve important functions in life insurance policies but do not provide the same benefit as the Guaranteed Insurability Rider. For instance, the Waiver of Premium Rider waives premium payments if the insured becomes disabled, but it doesn't allow for increased coverage. The Cost of Living Rider adjusts coverage based on inflation but does not allow the policyholder to increase coverage based on personal health changes. Lastly, the Child Rider adds coverage for children but is unrelated to the policyholder's own health status.