Question

18 lian has just received her whole life policy with a guaranteed insurability benefit (gib) rider. the face amount of the policy is $200,000. the gib allows her an increase of 10% of the face amount every time the option is exercised for the next 20 years at the policy anniversary for a cumulative increase of $200,000.
which of the following is true about the gib rider?
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a. if lian does not exercise her options to increase the benefit by $200,000 over the next 20 years, the period will be extended until she exercises her options.
b. if lian exercises her gib option, the insurer will underwrite her financially to ensure that the benefit is commensurate with her income.
c. lian can increase the benefit as provided by the gib rider and there will be no medical underwriting for the increase in policy benefit.
d. if lian does not exercise her option in any one year, the option will be carried forward and can be exercised in a subsequent year.
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Explanation:

• Option a: GIB rider has a 20 - year period, and it doesn't get extended if options aren't exercised within that time. So a is false.
• Option b: A Guaranteed Insurability Benefit (GIB) rider doesn't require the insurer to underwrite based on income when the option is exercised. So b is false.
• Option c: One of the key features of a GIB rider is that the policyholder can increase the benefit as per the rider's terms, and there is no medical underwriting for the increase in policy benefit. So c is true.
• Option d: GIB rider options are typically exercised at policy anniversaries within the 20 - year period, and unexercised options in a year are not carried forward. So d is false.

Answer:

c. Lian can increase the benefit as provided by the GIB rider and there will be no medical underwriting for the increase in policy benefit.