With all new policies except those issued on a substandard basis and short-duration term policies, most insurance companies are now offering an option that permits the policyowner, at stated intervals and below a specified age, to purchase specified amounts of additional insurance without evidence of insurability. The additional insurance need not be on the same plan as the basic policy to which the option is attached; the option is exercisable in favor of any standard whole life or other cash value insurance policies offered by the company. Premiums for the new insurance are payable at standard rates on the basis of the insured�s attained age on the option date. If the original policy contains a waiver-of-premium provision and accidental death benefits, the new policies will, at the insured�s option, contain the same features. If premiums are being waived on the original policy at the time an option for additional insurance is exercised, premiums on the new policy will be waived from the beginning (and will continue to be waived if the insured is totally disabled).

The options vary as to details, but the first provision of this type, which was introduced in the 1950s and has served as a pattern for most of those introduced later, permitted the insured to purchase up to $10,000 of additional insurance at 3-year intervals beginning with the policy anniversary nearest the insured�s 25th birthday and terminating with the anniversary nearest the insured�s 40th birthday. Under current policies the amount of insurance that can be obtained on each specified policy anniversary is usually limited to some percentage of the original face amount up to a specified maximum dollar amount, such as $60,000. Some policies also specify an aggregate limit (for example, two times the original face amount) on the amount of coverage that can be purchased under this option without evidence of insurability. Option amounts vary from company to company but may be as high as $100,000 per exercise option with some insurers.

Some contracts also permit the purchase of additional insurance upon the insured�s marriage or following the birth of the insured�s first child or subsequent children. Some contracts even provide coverage automatically for 60 to 90 days after each option date.

The option is available only for an extra premium that varies, not in proportion to the number of option dates remaining, as might be supposed, but with the age of issue. The schedule of annual premiums charged for the option by one company begins at $0.50 per $1,000 at age 0 and increases to approximately $2.00 per $1,000 at age 37. These premiums reflect the company�s estimate of the average amount of extra mortality that it will experience on policies issued without evidence of insurability and, from the standpoint of the insured, may be regarded as the cost of "insuring" his or her insurability. Premiums for the option are payable to the last anniversary at which it can be exercised�usually age 40�or to the end of the premium-paying period of the basic policy, whichever is earlier.

Many insurers also offer guaranteed insurance under cost-of-living adjustments that increase policy amounts based on rises in economic inflation indicators, such as the Consumer Price Index. The insured typically can accept or refuse this offer, but if the insured refuses, the provisions may terminate. Guaranteed insurance under cost-of-living adjustments is typically offered at 3-year intervals from the issue date of the policy.