We are going to look at life insurance policies that we term the ‘Last Resort Options’.
These are policies that offer cover without any medical evidence or questions whatsoever. These are often termed Guaranteed Acceptance Policies.
There is no writing to your GP, no medical examinations, no being declined due to your illness.
That sounds fantastic so why do you call them the Last Resort?
The reason we term them the Last Resort is because for the vast majority of people they offer very poor value for money. If you are in good or reasonable health you can almost certainly obtain better cover for a significantly cheaper cost. Please refer back to our main life insurance page.
So are they just rubbish?
Not in every circumstance. They can play a vital role for people who are in very poor health who cannot find cover in any other way.
So how do they work?
They fall into two main categories:
- Waiting Period Policies – these do not cover you straight away but have a waiting period before the cover becomes fully active, usually either 12 or 24 months for example Over 50’s Life insurance policies (remember Michael Parkinson with his free pen?)
- Exclusion Policies – Policies that offer cover immediately but exclude any pre existing medical conditions.
Lets have a quick look at examples of both types…
Waiting Period Policies
Over 50’s Life Insurance Policy – this is the most common variant
Hugely advertised on daytime TV they are typically sold to cover funeral expenses or to provide a lump sum for your family. They usually make the fact that there are no medical questions a big selling point. Here are some features of a typical policy:
- Usually a small minimum monthly cost
- Usually comes with a free gift
- If you die in the first 12 or 24 months you just get your premiums returned
- If you die after this waiting period you get full cover.
- The cover carries on for the whole of your life
To give you an idea of the sort of value they provide we ran a quick quote for a 53 year old non smoking male wanting £18000 of life insurance for the rest of his life.
An over 50’s quote with Sun Life was £59 per month with a 1 year waiting period.
A ‘normal’ Whole of Life quote from Vitality was £16.63 per month with no waiting period.
As you can see the results are quite dramatic and if you are in good health there is no good reason to take out an over 50s policy, please see our main life insurance page for your options.
Things however are VERY different if the applicant has serious health issues. Lets take things to an extreme:
If this 53 year old man has been diagnosed with some form of terminal illness and had say 18 months to live they would certainly have been declined cover under a ‘normal’ policy and the Last Resort Option of an Over 50s policy now offers excellent value.
To learn more about Over 50’s policies and see the different providers compare please visit https://www.moneysavingexpert.com
Under 50 Policies
A more recent development is the introduction of the same type of policy for clients who have not yet reached 50 years old.
Initially this started with policies for 30-80 year olds but we have now discovered contracts that can be taken out from as young as 18.
The principle is the same, you have a waiting period before your cover is fully operational and they do not offer great value unless you cannot obtain cover elsewhere.
Here is a summary of policies that are on offer:
The second type of ‘Last Resort’ policy is the Exclusion type.
With a ‘normal’ life insurance policy you will be asked medical questions and the insurance company will try and cover you and include all your medical conditions. This will then ensure that if you die from any cause the policy will still pay out.
The problem with this is that if your pre existing medical condition is very serious they will either increase the cost of your cover dramatically or not offer you cover at all and decline you.
Many people then say “well just cover me for everything else and exclude my illness”. This has not been an option until recently and the introduction of Exclusion Policies.
The Exclusion Policies are operated by ESMI. Quite simply they will guarantee you acceptance for life insurance with immediate cover (no waiting period like the policies described above). The ‘catch’ is that they will exclude any pre existing medical condition (or related conditions).
So lets say you had a recent heart attack and have been declined insurance through ‘normal’ channels ESMI would offer you immediate cover but would exclude any death from anything related to the heart attack.
This is not ideal but remember these are ‘Last Resort’ policies and you may feel any cover is better than none. The ESMI works best for illnesses that are very specific and do not have many additional complications that can be attributed back to the pre existing medical condition that has been excluded.
More details on ESMI can be found at https://www.getesmi.co.uk
PLEASE NOTE THAT APPLICATIONS FOR THIS TYPE OF COVER ARE CURRENTLY SUSPENDED. WE WILL KEEP YOU UPDATED WHEN AND IF THE SITUATION CHANGES.
So which type is most suitable?
This is really dependent on your personal circumstances and the type of pre existing medical condition you have. We don’t offer financial advice and you should only use this site as a guide but we have supplied a couple of scenarios below.
Scenario 1 : John is 58 and has been diagnosed with a terminal illness. The prognosis is that he probably has around 18-24 months to live. He wants to try and provide enough cover to pay for his funeral arrangements.
In this instance John would be wise to look into either Over 50s policies with a 12 month Waiting Period or into Smart Insurance which again just has a 12 month Waiting Period.
Scenario 2 : Fred is in remission for cancer. He has tried to get insurance through the usual channels but has been declined in every instance until he has been in remission for 5 years. He is still under regular check ups but the cancer has been fully removed and he has been told it is unlikely to return and it is unlikely he will have any related issues. Fred wants immediate cover as he is moving house and wants to make sure his mortgage will be covered in the event of his death.
In this instance Fred should consider an ESMI policy as it will offer immediate cover and he will be insured for any cause of death providing it wasn’t related to his cancer (or any other pre existing medical condition)
Scenario 3 : Mary has well controlled diabetes with no complications or any other medical conditions. She would like life insurance to protect her young family.
Mary should not be considering ‘Last Resort’ policies. She will almost certainly obtain much better value by applying for life insurance through ‘normal’ channels.