OLT-Breakroom: Chapter 6, Lesson 2 Guaranteed Insurability Rider

It's not clear to me how do we answer the following question

The Question:

If a payor had purchased a $100,000 contract and rider on a young insured, and exercised all the options available, what would be the amount of insurance at the insured's age 45? $___________.

Answer in the online lesson is $700,000. However, there is no clear direction on how much you can increase the amount of insurance per option. I understand that you can exercise 6 times up to the age of 40. However, nothing in the reading material states the amount of increase. The study manual only states "The amount of insurance that can be purchased at each option date is subject to minimums and maximums specified in the rider"

So, are we assuming that the rider stated the maximum specified is the face value of the initial contract?

Re: Chapter 6, Lesson 2 Guaranteed Insurability Rider

by Jerry Bateman - - Thursday, 24 March 2016, 2:16 PM

Hey Marie,

You have asked a very good question. I believe in years past there was information that discussed the Guaranteed Insurability Rider (GIR) in greater detail. As you know, there are typically six (GIR) options at certain ages, typically, 25, 28, 31, 34, 37, and 40. Also, many companies will allow the policy owner to exercise an option early, if there is a marriage or the birth of a baby. The maximum option amount was determined by the amount purchased, not to exceed the face amount of the policy. Historically, the actual maximum has been $100,000. This maximum varies by insurance company. This is where the question emanated. It appears that I need to do some work on the course material. Thank you.

Jerry Bateman