Which statement correctly describes a Guaranteed Insurability Option?

A Guaranteed Insurability Option is a feature that allows the policyholder to increase their life insurance coverage at specified times without having to go through the underwriting process again. This means that if the policyholder's needs change, such as having a child or buying a new home, they can secure additional coverage without needing to prove their health status or insurability at that moment. This option is particularly beneficial as it provides peace of mind, knowing that coverage can be increased without the worry of potential health issues that could make obtaining more insurance difficult or costly.

The other statements do not accurately describe the Guaranteed Insurability Option. It is not applicable to all types of insurance policies; rather, it is primarily found in individual life insurance products. Additionally, the policyholder does not need to prove insurability when they choose to make the increase, which distinguishes this feature from other options that might require such proof. Finally, it does not automatically increase the death benefit each year; instead, the policyholder exercises the option at specific intervals or life events to increase coverage as needed. This delineation helps clarify the unique characteristics of the Guaranteed Insurability Option.