Rhode Island Life Insurance Practice Exam

Which statement regarding a Guaranteed Insurability Option rider is NOT true?

1. Evidence of insurability is required when the option is exercised

2. The insured can purchase additional coverage at specified times

3. This option typically has an extra premium cost

4. The option is applicable only at certain intervals

The correct answer is: Evidence of insurability is required when the option is exercised

The Guaranteed Insurability Option rider allows an insured individual to purchase additional coverage without needing to provide evidence of insurability when the option is exercised. Therefore, asserting that evidence of insurability is required when the option is exercised is not true. This rider is typically included in life insurance policies to provide additional security, especially as the insured ages or faces changes in health that might otherwise impact their ability to secure additional coverage. The rider provides the policyholder the opportunity to increase their coverage at predetermined intervals or life events, ensuring they have the necessary protection as their needs evolve, without undergoing additional medical underwriting. This enhances the value of the policy, making it a favored option for many individuals seeking flexible life insurance solutions. By contrast, the other statements correctly describe features of the Guaranteed Insurability Option: the insured can indeed purchase additional coverage during specified times, this option is typically associated with an additional premium cost, and it is applicable only at certain intervals, which are predefined by the policy terms.