Texas Life Agent Practice Exam

What is a true statement about exercising a Guaranteed Insurability option?

1. Evidence of insurability is always required

2. The new insurance is available at the current age rate

3. The maximum purchase amount is not specified in the contract

4. Evidence of insurability is not required, and the maximum purchase is specified in the contract

The correct answer is: Evidence of insurability is not required, and the maximum purchase is specified in the contract

Exercising a Guaranteed Insurability option allows policyholders to purchase additional insurance coverage without having to provide evidence of insurability. This means that as long as the option is available and exercised within the specific time frames outlined in the policy, the insured can add coverage regardless of their health status at that time. Additionally, the terms of the contract will typically specify the maximum amount of coverage that can be obtained through this option. This ensures clarity for both the insurer and the policyholder regarding how much additional insurance can be acquired and under what conditions. In essence, choosing to utilize this option provides significant flexibility and assurance to policyholders, making it easier for them to adapt their life insurance coverage as their needs change, without the fear of being denied coverage due to changes in health.