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 after buying our starter home and getting married.
To help me protect my belongings – and the people I love – my agent helped me get a life insurance policy with a GIO rider.
We had a valuable and insightful conversation. Here, my agent 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 is life insurance so important?
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.
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:
- Do you have a mortgage or student loans?
- Are you a single parent with a child or children who depend on you?
- Are you the sole earner in your household?
- Do you have a family that needs taken care of in the event you’re not there anymore?
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.
In our increasingly digital world, it’s good to choose a digital executor for your online accounts as well.
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. We also have the ERIExpress Life product that’s easier to get and reasonable to afford, and you can get it without needing a physical exam.1 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.
What’s the importance of the guaranteed insurability option rider (GIO) and why would someone really want it? Can you lose it?
You have no idea what’s going to happen to you three years from now, five years from now or 10 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 GIO when you’re young, you’ll already have it in place should you develop a condition like heart disease or cancer down the line.
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.
Once you’re approved by underwriting, the rider is a bound contract–the only way you can lose it is if you stop paying on your policy. 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 your coverage works.
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 when you have the GIO rider. Those are marriage, buying a home and having a child. The way it works is that it allows you to add more life insurance through an additional life insurance policy – without having to go back through underwriting.
You have the opportunity to add coverage because of your GIO rider at certain ages, starting at age 25 going up to age 46 (basically every 3 years). The most coverage you can add at each point is $250,000.2
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 asking 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 premium 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 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 break down that wall long enough to make sure your customer is covered.
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.
1The Guaranteed Insurability Option Rider is not available with the ERIExpress Life product.
2Certain restrictions apply. Speak with your Agent for more details.