Guides & Tips Life Insurance

Guaranteed Insurability

Guaranteed Insurability allows you to increase your existing life insurance policy without any medical evidence.

Why is that important?

If you are in good health it is usually pretty irrelevant as you can more often than not take out a new policy for a cheaper premium than increasing your existing one with the Guaranteed Insurability Option. However, If you have a pre existing medical condition the Guaranteed Insurability Option can be absolutely vital.

Why Is it important if you have a pre existing medical condition?

If you have a medical condition and you wish to take out a new life insurance policy the insurance company may either load (increase) the cost of your cover or in the worst case scenario decline cover completely.

If you have an existing policy with a Guaranteed Insurability Option you may be able to increase this as if you were in perfect health, resulting in a much cheaper deal or even obtaining extra cover when non would be available through the usual channels.

Do all life insurance policies have the Guaranteed Insurability Option?

No.  Some do and some don’t.

To find out you would need to read your insurance policy document and/or check with your life insurance company.

If you already had the pre existing medical condition when you started the policy there is also a good chance that the Guaranteed Insurability Option was excluded.

Can I increase the cover at any time?

Not necessarily. Many policies only allow you to increase the cover on certain major events like moving house or the birth of a child.

We would again recommend that you read your insurance policy document and/or check with your life insurance company to see their criteria. 

Why has my Broker/ Advisor not mentioned this?

How can this be said diplomatically?

A ‘perfect’ Advisor should have checked all your existing policies to see if you have any policies with the option, especially if you have a pre existing medical condition

… however many Advisors will not even be aware that such an option exists and many will not pursue it as there is often no commission payable on exercising the option, whereas there is on a new policy.

If you’re Broker/Advisor did mention it then give him top marks!

For more information about Life Insurance for Pre Existing Medical Condition and ways of obtaining competitive cover please read our main article.