The Importance of Guaranteed Purchase Option in Permanent Life Insurance

The Importance of Guaranteed Purchase Option in Permanent Life Insurance

Why is Guaranteed Purchase Option in permanent life insurance important? Words or feelings cannot express what the importance of a Guaranteed Purchase Option (GPO) in a permanent life insurance policy has done for me and my family. If you have children, having a GPO for them on their own permanent life insurance policy can be the difference between their future ability to get life insurance coverage or not.

When I first started my career as an insurance agent, I was always adamant with prospects and clients about making sure they had a GPO on an individual permanent life insurance policy for each of their children. Its ability to “lock in” the medical insurability of the insured is phenomenal.

The GPO Rider comes as an added feature on a permanent life insurance policy (and some term contracts) for a very small fee. It allows the insured the ability to purchase an additional policy at ages 17 (with some companies with their parent as the owner), 25, 28, 31, 34, 37, and 40 with a face amount of each separate policy being equal to or less than the original policy the rider was attached to. It doesn’t matter what their health is! The original contract could have already built up some pretty substantial cash values by these ages, and future contracts would be able to do the same.

I began to teach about the significance of the GPO all the more, when I bought a $50K 20-pay life policy for my daughter 14 days after she was born. At age 2 she was diagnosed with autism, and at age 7 with epilepsy. No company will insure her now without a substantial rating, if at all! Because of the GPO, she can potentially have $400K in permanent whole life insurance at standard rates. $400K might not seem like much, but ask someone who is uninsurable if they would like to have $400K in life insurance at a standard rate and see their response.

The bottom line is, get your children life insurance with a GPO before something happens. It will be without a doubt, one of the most thoughtful and loving gifts you could ever have provided for them… trust me. 

About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at   1-800-651-1953 or KMcDonald@Pivot.com.